Correlation Between KYB PORATION and DENSO CORP

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

By analyzing existing cross correlation between KYB PORATION and DENSO P ADR, you can compare the effects of market volatilities on KYB PORATION and DENSO CORP 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 KYB PORATION with a short position of DENSO CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of KYB PORATION and DENSO CORP.

Diversification Opportunities for KYB PORATION and DENSO CORP

0.04

Correlation Coefficient

KYB PORATION  DENSO CORP

Significant diversification

The 3 months correlation between KYB and DENSO is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding KYB PORATION and DENSO P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENSO P ADR and KYB PORATION 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 KYB PORATION are associated (or correlated) with DENSO CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENSO P ADR has no effect on the direction of KYB PORATION i.e., KYB PORATION and DENSO CORP go up and down completely randomly.

Pair Corralation between KYB PORATION and DENSO CORP

Assuming the 90 days horizon KYB PORATION is expected to generate 0.52 times more return on investment than DENSO CORP. However, KYB PORATION is 1.91 times less risky than DENSO CORP. It trades about 0.59 of its potential returns per unit of risk. DENSO P ADR is currently generating about -0.01 per unit of risk. If you would invest  1,600  in KYB PORATION on October 6, 2024 and sell it today you would earn a total of  170.00  from holding KYB PORATION or generate 10.63% return on investment over 90 days.

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

KYB PORATION  vs.  DENSO P ADR

KYB PORATION

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KYB PORATION are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KYB PORATION reported solid returns over the last few months and may actually be approaching a breakup point.

DENSO P ADR

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with KYB PORATION and DENSO CORP

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

The idea behind KYB PORATION and DENSO P ADR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.