Correlation Between Nissan Chemical and Caseys General

Can any of the company-specific risk be diversified away by investing in both Nissan Chemical and Caseys General 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 Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nissan Chemical Corp and Caseys General Stores, you can compare the effects of market volatilities on Nissan Chemical and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan Chemical and Caseys General.

Diversification Opportunities for Nissan Chemical and Caseys General

0.1

Correlation Coefficient

Nissan Chemical  Caseys General

Average diversification

The 3 months correlation between Nissan and Caseys is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Chemical Corp and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Corp are associated (or correlated) with Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Nissan Chemical i.e., Nissan Chemical and Caseys General go up and down completely randomly.

Pair Corralation between Nissan Chemical and Caseys General

Assuming the 90 days trading horizon Nissan Chemical Corp is expected to under-perform the Caseys General. In addition to that, Nissan Chemical is 1.1 times more volatile than Caseys General Stores. It trades about -0.1 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.03 per unit of volatility. If you would invest  38,200  in Caseys General Stores on October 7, 2024 and sell it today you would earn a total of  400.00  from holding Caseys General Stores or generate 1.05% return on investment over 90 days.

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

Nissan Chemical Corp  vs.  Caseys General Stores

Nissan Chemical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Caseys General Stores

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nissan Chemical and Caseys General

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

The idea behind Nissan Chemical Corp and Caseys General Stores 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.