Correlation Between Nissan Chemical and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Nissan Chemical and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Nissan Chemical and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan Chemical and SMA Solar.
Diversification Opportunities for Nissan Chemical and SMA Solar
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nissan and SMA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Chemical Corp and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Nissan Chemical i.e., Nissan Chemical and SMA Solar go up and down completely randomly.
Pair Corralation between Nissan Chemical and SMA Solar
Assuming the 90 days trading horizon Nissan Chemical Corp is expected to under-perform the SMA Solar. But the stock apears to be less risky and, when comparing its historical volatility, Nissan Chemical Corp is 5.85 times less risky than SMA Solar. The stock trades about -0.09 of its potential returns per unit of risk. The SMA Solar Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,356 in SMA Solar Technology on December 29, 2024 and sell it today you would earn a total of 414.00 from holding SMA Solar Technology or generate 30.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Nissan Chemical Corp vs. SMA Solar Technology
Performance |
Timeline |
Nissan Chemical Corp |
SMA Solar Technology |
Nissan Chemical and SMA Solar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nissan Chemical and SMA Solar
The main advantage of trading using opposite Nissan Chemical and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan Chemical position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc |
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Check out your portfolio center.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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