Correlation Between Next Hydrogen and Daifuku Co

Can any of the company-specific risk be diversified away by investing in both Next Hydrogen and Daifuku Co 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 Next Hydrogen and Daifuku Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Next Hydrogen Solutions and Daifuku Co, you can compare the effects of market volatilities on Next Hydrogen and Daifuku Co 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 Next Hydrogen with a short position of Daifuku Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Hydrogen and Daifuku Co.

Diversification Opportunities for Next Hydrogen and Daifuku Co

-0.17

Correlation Coefficient

Next Hydrogen  Daifuku Co

Good diversification

The 3 months correlation between Next and Daifuku is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Next Hydrogen Solutions and Daifuku Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daifuku Co and Next Hydrogen 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 Next Hydrogen Solutions are associated (or correlated) with Daifuku Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daifuku Co has no effect on the direction of Next Hydrogen i.e., Next Hydrogen and Daifuku Co go up and down completely randomly.

Pair Corralation between Next Hydrogen and Daifuku Co

Assuming the 90 days horizon Next Hydrogen Solutions is expected to under-perform the Daifuku Co. In addition to that, Next Hydrogen is 4.14 times more volatile than Daifuku Co. It trades about -0.11 of its total potential returns per unit of risk. Daifuku Co is currently generating about 0.18 per unit of volatility. If you would invest  954.00  in Daifuku Co on August 31, 2024 and sell it today you would earn a total of  87.00  from holding Daifuku Co or generate 9.12% return on investment over 90 days.

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

Next Hydrogen Solutions  vs.  Daifuku Co

Next Hydrogen Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Next Hydrogen Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Next Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Daifuku Co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daifuku Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Daifuku Co may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Next Hydrogen and Daifuku Co

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

The idea behind Next Hydrogen Solutions and Daifuku Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.