Correlation Between Postal Savings and Canon

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

By analyzing existing cross correlation between Postal Savings Bank and Canon Inc, you can compare the effects of market volatilities on Postal Savings and Canon 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 Postal Savings with a short position of Canon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Canon.

Diversification Opportunities for Postal Savings and Canon

0.13

Correlation Coefficient

Postal Savings  Canon

Average diversification

The 3 months correlation between Postal and Canon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of Postal Savings i.e., Postal Savings and Canon go up and down completely randomly.

Pair Corralation between Postal Savings and Canon

Assuming the 90 days horizon Postal Savings Bank is expected to generate 0.84 times more return on investment than Canon. However, Postal Savings Bank is 1.19 times less risky than Canon. It trades about 0.14 of its potential returns per unit of risk. Canon Inc is currently generating about -0.01 per unit of risk. If you would invest  54.00  in Postal Savings Bank on September 26, 2024 and sell it today you would earn a total of  2.00  from holding Postal Savings Bank or generate 3.7% return on investment over 90 days.

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

Postal Savings Bank  vs.  Canon Inc

Postal Savings Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Postal Savings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Canon Inc

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Canon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Postal Savings and Canon

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

The idea behind Postal Savings Bank and Canon Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.