Correlation Between Amphenol and NISSHA CO

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Can any of the company-specific risk be diversified away by investing in both Amphenol and NISSHA 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 Amphenol and NISSHA CO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amphenol and NISSHA LTD, you can compare the effects of market volatilities on Amphenol and NISSHA 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 Amphenol with a short position of NISSHA CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amphenol and NISSHA CO.

Diversification Opportunities for Amphenol and NISSHA CO

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Amphenol and NISSHA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol and NISSHA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSHA LTD and Amphenol 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 Amphenol are associated (or correlated) with NISSHA CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSHA LTD has no effect on the direction of Amphenol i.e., Amphenol and NISSHA CO go up and down completely randomly.

Pair Corralation between Amphenol and NISSHA CO

Assuming the 90 days horizon Amphenol is expected to generate 0.84 times more return on investment than NISSHA CO. However, Amphenol is 1.2 times less risky than NISSHA CO. It trades about 0.17 of its potential returns per unit of risk. NISSHA LTD is currently generating about -0.13 per unit of risk. If you would invest  5,811  in Amphenol on October 8, 2024 and sell it today you would earn a total of  983.00  from holding Amphenol or generate 16.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Amphenol  vs.  NISSHA LTD

 Performance 
       Timeline  
Amphenol 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Amphenol reported solid returns over the last few months and may actually be approaching a breakup point.
NISSHA LTD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NISSHA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Amphenol and NISSHA CO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amphenol and NISSHA CO

The main advantage of trading using opposite Amphenol and NISSHA CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amphenol position performs unexpectedly, NISSHA 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 NISSHA CO will offset losses from the drop in NISSHA CO's long position.
The idea behind Amphenol and NISSHA LTD 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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