Correlation Between WT OFFSHORE and NISSAN CHEMICAL

Can any of the company-specific risk be diversified away by investing in both WT OFFSHORE and NISSAN CHEMICAL 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 WT OFFSHORE and NISSAN CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WT OFFSHORE and NISSAN CHEMICAL IND, you can compare the effects of market volatilities on WT OFFSHORE and NISSAN CHEMICAL 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 WT OFFSHORE with a short position of NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT OFFSHORE and NISSAN CHEMICAL.

Diversification Opportunities for WT OFFSHORE and NISSAN CHEMICAL

0.38

Correlation Coefficient

WT OFFSHORE  NISSAN CHEMICAL

Weak diversification

The 3 months correlation between UWV and NISSAN is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND and WT OFFSHORE 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 WT OFFSHORE are associated (or correlated) with NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of WT OFFSHORE i.e., WT OFFSHORE and NISSAN CHEMICAL go up and down completely randomly.

Pair Corralation between WT OFFSHORE and NISSAN CHEMICAL

Assuming the 90 days trading horizon WT OFFSHORE is expected to generate 3.46 times more return on investment than NISSAN CHEMICAL. However, WT OFFSHORE is 3.46 times more volatile than NISSAN CHEMICAL IND. It trades about 0.02 of its potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about -0.08 per unit of risk. If you would invest  145.00  in WT OFFSHORE on December 21, 2024 and sell it today you would earn a total of  1.00  from holding WT OFFSHORE or generate 0.69% return on investment over 90 days.

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

WT OFFSHORE  vs.  NISSAN CHEMICAL IND

WT OFFSHORE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WT OFFSHORE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WT OFFSHORE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NISSAN CHEMICAL IND

Risk-Adjusted Performance

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 comparatively stable fundamental indicators, NISSAN CHEMICAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WT OFFSHORE and NISSAN CHEMICAL

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

The idea behind WT OFFSHORE and NISSAN CHEMICAL IND 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.