Correlation Between Nomura Holdings and Companhia Energtica

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

By analyzing existing cross correlation between Nomura Holdings and Companhia Energtica de, you can compare the effects of market volatilities on Nomura Holdings and Companhia Energtica 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 Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Companhia Energtica.

Diversification Opportunities for Nomura Holdings and Companhia Energtica

-0.46

Correlation Coefficient

Nomura Holdings  Companhia Energtica

Very good diversification

The 3 months correlation between Nomura and Companhia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica 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 Companhia Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Companhia Energtica go up and down completely randomly.

Pair Corralation between Nomura Holdings and Companhia Energtica

Assuming the 90 days trading horizon Nomura Holdings is expected to generate 1.07 times more return on investment than Companhia Energtica. However, Nomura Holdings is 1.07 times more volatile than Companhia Energtica de. It trades about 0.13 of its potential returns per unit of risk. Companhia Energtica de is currently generating about -0.03 per unit of risk. If you would invest  1,731  in Nomura Holdings on February 1, 2024 and sell it today you would earn a total of  1,296  from holding Nomura Holdings or generate 74.87% return on investment over 90 days.

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

Nomura Holdings  vs.  Companhia Energtica de

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 somewhat uncertain basic indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Companhia Energtica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Energtica de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Companhia Energtica 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 Nomura Holdings and Companhia Energtica

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

The idea behind Nomura Holdings and Companhia Energtica de 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.