Correlation Between Ryohin Keikaku and Gap

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

By analyzing existing cross correlation between Ryohin Keikaku Co and The Gap, you can compare the effects of market volatilities on Ryohin Keikaku and Gap 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 Ryohin Keikaku with a short position of Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryohin Keikaku and Gap.

Diversification Opportunities for Ryohin Keikaku and Gap

-0.38

Correlation Coefficient

Ryohin Keikaku  Gap

Very good diversification

The 3 months correlation between Ryohin and Gap is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ryohin Keikaku Co and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap and Ryohin Keikaku 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 Ryohin Keikaku Co are associated (or correlated) with Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of Ryohin Keikaku i.e., Ryohin Keikaku and Gap go up and down completely randomly.

Pair Corralation between Ryohin Keikaku and Gap

Assuming the 90 days horizon Ryohin Keikaku Co is expected to generate 0.88 times more return on investment than Gap. However, Ryohin Keikaku Co is 1.14 times less risky than Gap. It trades about 0.1 of its potential returns per unit of risk. The Gap is currently generating about -0.08 per unit of risk. If you would invest  2,049  in Ryohin Keikaku Co on December 20, 2024 and sell it today you would earn a total of  351.00  from holding Ryohin Keikaku Co or generate 17.13% return on investment over 90 days.

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

Ryohin Keikaku Co  vs.  The Gap

Ryohin Keikaku

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryohin Keikaku Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ryohin Keikaku reported solid returns over the last few months and may actually be approaching a breakup point.

Gap

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ryohin Keikaku and Gap

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

The idea behind Ryohin Keikaku Co and The Gap 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.