Correlation Between BANK HANDLOWY and SHIMANO INC

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

By analyzing existing cross correlation between BANK HANDLOWY and SHIMANO INC UNSPADR10, you can compare the effects of market volatilities on BANK HANDLOWY and SHIMANO INC 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 BANK HANDLOWY with a short position of SHIMANO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK HANDLOWY and SHIMANO INC.

Diversification Opportunities for BANK HANDLOWY and SHIMANO INC

0.38

Correlation Coefficient

BANK HANDLOWY  SHIMANO INC

Weak diversification

The 3 months correlation between BANK and SHIMANO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and SHIMANO INC UNSPADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIMANO INC UNSPADR10 and BANK HANDLOWY 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 BANK HANDLOWY are associated (or correlated) with SHIMANO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIMANO INC UNSPADR10 has no effect on the direction of BANK HANDLOWY i.e., BANK HANDLOWY and SHIMANO INC go up and down completely randomly.

Pair Corralation between BANK HANDLOWY and SHIMANO INC

Assuming the 90 days trading horizon BANK HANDLOWY is expected to generate 0.44 times more return on investment than SHIMANO INC. However, BANK HANDLOWY is 2.28 times less risky than SHIMANO INC. It trades about 0.52 of its potential returns per unit of risk. SHIMANO INC UNSPADR10 is currently generating about 0.05 per unit of risk. If you would invest  2,070  in BANK HANDLOWY on December 27, 2024 and sell it today you would earn a total of  760.00  from holding BANK HANDLOWY or generate 36.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

BANK HANDLOWY  vs.  SHIMANO INC UNSPADR10

BANK HANDLOWY

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BANK HANDLOWY unveiled solid returns over the last few months and may actually be approaching a breakup point.

SHIMANO INC UNSPADR10

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SHIMANO INC UNSPADR10 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, SHIMANO INC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BANK HANDLOWY and SHIMANO INC

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

The idea behind BANK HANDLOWY and SHIMANO INC UNSPADR10 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.