Correlation Between Hi Sharp and Otsuka Information

Can any of the company-specific risk be diversified away by investing in both Hi Sharp and Otsuka Information 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 Hi Sharp and Otsuka Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hi Sharp Electronics and Otsuka Information Technology, you can compare the effects of market volatilities on Hi Sharp and Otsuka Information 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 Hi Sharp with a short position of Otsuka Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Sharp and Otsuka Information.

Diversification Opportunities for Hi Sharp and Otsuka Information

0.47

Correlation Coefficient

Hi Sharp  Otsuka Information

Very weak diversification

The 3 months correlation between 3128 and Otsuka is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hi Sharp Electronics and Otsuka Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka Information and Hi Sharp 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 Hi Sharp Electronics are associated (or correlated) with Otsuka Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka Information has no effect on the direction of Hi Sharp i.e., Hi Sharp and Otsuka Information go up and down completely randomly.

Pair Corralation between Hi Sharp and Otsuka Information

Assuming the 90 days trading horizon Hi Sharp Electronics is expected to under-perform the Otsuka Information. In addition to that, Hi Sharp is 1.48 times more volatile than Otsuka Information Technology. It trades about -0.02 of its total potential returns per unit of risk. Otsuka Information Technology is currently generating about 0.02 per unit of volatility. If you would invest  17,650  in Otsuka Information Technology on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Otsuka Information Technology or generate 0.57% return on investment over 90 days.

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

Hi Sharp Electronics  vs.  Otsuka Information Technology

Hi Sharp Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hi Sharp Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hi Sharp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Otsuka Information

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Otsuka Information Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Otsuka Information is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hi Sharp and Otsuka Information

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

The idea behind Hi Sharp Electronics and Otsuka Information Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.