Correlation Between Nomura Holdings and CTP NV

Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and CTP NV 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 Nomura Holdings and CTP NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nomura Holdings and CTP NV EO, you can compare the effects of market volatilities on Nomura Holdings and CTP NV 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 Nomura Holdings with a short position of CTP NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and CTP NV.

Diversification Opportunities for Nomura Holdings and CTP NV

-0.72

Correlation Coefficient

Nomura Holdings  CTP NV

Pay attention - limited upside

The 3 months correlation between Nomura and CTP is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and CTP NV EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTP NV EO and Nomura Holdings 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 Nomura Holdings are associated (or correlated) with CTP NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTP NV EO has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and CTP NV go up and down completely randomly.

Pair Corralation between Nomura Holdings and CTP NV

Assuming the 90 days horizon Nomura Holdings is expected to generate 1.32 times more return on investment than CTP NV. However, Nomura Holdings is 1.32 times more volatile than CTP NV EO. It trades about 0.05 of its potential returns per unit of risk. CTP NV EO is currently generating about 0.06 per unit of risk. If you would invest  344.00  in Nomura Holdings on September 23, 2024 and sell it today you would earn a total of  195.00  from holding Nomura Holdings or generate 56.69% return on investment over 90 days.

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

Nomura Holdings  vs.  CTP NV EO

Nomura Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CTP NV EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTP NV EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nomura Holdings and CTP NV

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

The idea behind Nomura Holdings and CTP NV EO 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.