Correlation Between NISSAN CHEMICAL and Arthur J

Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and Arthur J 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 Arthur J 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 Arthur J Gallagher, you can compare the effects of market volatilities on NISSAN CHEMICAL and Arthur J 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 Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and Arthur J.

Diversification Opportunities for NISSAN CHEMICAL and Arthur J

0.22

Correlation Coefficient

NISSAN CHEMICAL  Arthur J

Modest diversification

The 3 months correlation between NISSAN and Arthur is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher 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 Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and Arthur J go up and down completely randomly.

Pair Corralation between NISSAN CHEMICAL and Arthur J

Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to under-perform the Arthur J. In addition to that, NISSAN CHEMICAL is 1.23 times more volatile than Arthur J Gallagher. It trades about -0.05 of its total potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.09 per unit of volatility. If you would invest  21,424  in Arthur J Gallagher on October 24, 2024 and sell it today you would earn a total of  6,876  from holding Arthur J Gallagher or generate 32.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

NISSAN CHEMICAL IND  vs.  Arthur J Gallagher

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Arthur J Gallagher

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arthur J may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NISSAN CHEMICAL and Arthur J

The main advantage of trading using opposite NISSAN CHEMICAL and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, Arthur J 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 Arthur J will offset losses from the drop in Arthur J's long position.

The idea behind NISSAN CHEMICAL IND and Arthur J Gallagher 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.