Correlation Between NISSAN CHEMICAL and Ping An

Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and Ping An at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NISSAN CHEMICAL and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NISSAN CHEMICAL IND and Ping An Healthcare, you can compare the effects of market volatilities on NISSAN CHEMICAL and Ping An and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NISSAN CHEMICAL with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and Ping An.

Diversification Opportunities for NISSAN CHEMICAL and Ping An

0.72

Correlation Coefficient

NISSAN CHEMICAL  Ping An

Poor diversification

The 3 months correlation between NISSAN and Ping is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and Ping An Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Healthcare and NISSAN CHEMICAL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NISSAN CHEMICAL IND are associated (or correlated) with Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Healthcare has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and Ping An go up and down completely randomly.

Pair Corralation between NISSAN CHEMICAL and Ping An

Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to generate 0.38 times more return on investment than Ping An. However, NISSAN CHEMICAL IND is 2.65 times less risky than Ping An. It trades about -0.04 of its potential returns per unit of risk. Ping An Healthcare is currently generating about -0.04 per unit of risk. If you would invest  4,060  in NISSAN CHEMICAL IND on October 5, 2024 and sell it today you would lose (1,040) from holding NISSAN CHEMICAL IND or give up 25.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NISSAN CHEMICAL IND  vs.  Ping An Healthcare

NISSAN CHEMICAL IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSAN CHEMICAL IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, NISSAN CHEMICAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ping An Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ping An Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NISSAN CHEMICAL and Ping An

The main advantage of trading using opposite NISSAN CHEMICAL and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, Ping An can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ping An will offset losses from the drop in Ping An's long position.

The idea behind NISSAN CHEMICAL IND and Ping An Healthcare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.