Correlation Between MEDICAL FACILITIES and Tokio Marine

Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and Tokio Marine 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 MEDICAL FACILITIES and Tokio Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Tokio Marine Holdings, you can compare the effects of market volatilities on MEDICAL FACILITIES and Tokio Marine 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 MEDICAL FACILITIES with a short position of Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Tokio Marine.

Diversification Opportunities for MEDICAL FACILITIES and Tokio Marine

0.58

Correlation Coefficient

MEDICAL FACILITIES  Tokio Marine

Very weak diversification

The 3 months correlation between MEDICAL and Tokio is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Tokio Marine go up and down completely randomly.

Pair Corralation between MEDICAL FACILITIES and Tokio Marine

Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to under-perform the Tokio Marine. In addition to that, MEDICAL FACILITIES is 1.02 times more volatile than Tokio Marine Holdings. It trades about -0.18 of its total potential returns per unit of risk. Tokio Marine Holdings is currently generating about -0.14 per unit of volatility. If you would invest  3,660  in Tokio Marine Holdings on October 5, 2024 and sell it today you would lose (161.00) from holding Tokio Marine Holdings or give up 4.4% of portfolio value over 90 days.

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

MEDICAL FACILITIES NEW  vs.  Tokio Marine Holdings

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days MEDICAL FACILITIES NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, MEDICAL FACILITIES reported solid returns over the last few months and may actually be approaching a breakup point.

Tokio Marine Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tokio Marine Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tokio Marine is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MEDICAL FACILITIES and Tokio Marine

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

The idea behind MEDICAL FACILITIES NEW and Tokio Marine Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.