Correlation Between Nomura Holdings and BII Railway

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

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

Diversification Opportunities for Nomura Holdings and BII Railway

0.66

Correlation Coefficient

Nomura Holdings  BII Railway

Poor diversification

The 3 months correlation between Nomura and BII is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and BII Railway go up and down completely randomly.

Pair Corralation between Nomura Holdings and BII Railway

Assuming the 90 days horizon Nomura Holdings is expected to generate 0.65 times more return on investment than BII Railway. However, Nomura Holdings is 1.55 times less risky than BII Railway. It trades about 0.06 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.02 per unit of risk. If you would invest  317.00  in Nomura Holdings on March 28, 2025 and sell it today you would earn a total of  210.00  from holding Nomura Holdings or generate 66.25% return on investment over 90 days.

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

Nomura Holdings  vs.  BII Railway Transportation

Nomura Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nomura Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nomura Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BII Railway Transpor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BII Railway may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Nomura Holdings and BII Railway

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

The idea behind Nomura Holdings and BII Railway Transportation 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.