Correlation Between Nexam Chemical and Clean Motion

Can any of the company-specific risk be diversified away by investing in both Nexam Chemical and Clean Motion 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 Nexam Chemical and Clean Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nexam Chemical Holding and Clean Motion AB, you can compare the effects of market volatilities on Nexam Chemical and Clean Motion 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 Nexam Chemical with a short position of Clean Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and Clean Motion.

Diversification Opportunities for Nexam Chemical and Clean Motion

0.85

Correlation Coefficient

Nexam Chemical  Clean Motion

Very poor diversification

The 3 months correlation between Nexam and Clean is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Clean Motion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Motion AB and Nexam Chemical 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 Nexam Chemical Holding are associated (or correlated) with Clean Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Motion AB has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Clean Motion go up and down completely randomly.

Pair Corralation between Nexam Chemical and Clean Motion

Assuming the 90 days trading horizon Nexam Chemical is expected to generate 4.6 times less return on investment than Clean Motion. But when comparing it to its historical volatility, Nexam Chemical Holding is 2.22 times less risky than Clean Motion. It trades about 0.08 of its potential returns per unit of risk. Clean Motion AB is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Clean Motion AB on April 24, 2025 and sell it today you would earn a total of  21.00  from holding Clean Motion AB or generate 77.78% return on investment over 90 days.

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

Nexam Chemical Holding  vs.  Clean Motion AB

Nexam Chemical Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexam Chemical Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nexam Chemical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Clean Motion AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Motion AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Clean Motion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexam Chemical and Clean Motion

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

The idea behind Nexam Chemical Holding and Clean Motion AB 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.