Correlation Between AOYAMA TRADING and KURITA WTR

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

By analyzing existing cross correlation between AOYAMA TRADING and KURITA WTR INDUNSPADR, you can compare the effects of market volatilities on AOYAMA TRADING and KURITA WTR 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 AOYAMA TRADING with a short position of KURITA WTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and KURITA WTR.

Diversification Opportunities for AOYAMA TRADING and KURITA WTR

-0.19

Correlation Coefficient

AOYAMA TRADING  KURITA WTR

Good diversification

The 3 months correlation between AOYAMA and KURITA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and KURITA WTR INDUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KURITA WTR INDUNSPADR and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with KURITA WTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KURITA WTR INDUNSPADR has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and KURITA WTR go up and down completely randomly.

Pair Corralation between AOYAMA TRADING and KURITA WTR

Assuming the 90 days horizon AOYAMA TRADING is expected to generate 2.23 times more return on investment than KURITA WTR. However, AOYAMA TRADING is 2.23 times more volatile than KURITA WTR INDUNSPADR. It trades about 0.08 of its potential returns per unit of risk. KURITA WTR INDUNSPADR is currently generating about -0.01 per unit of risk. If you would invest  314.00  in AOYAMA TRADING on October 24, 2024 and sell it today you would earn a total of  1,026  from holding AOYAMA TRADING or generate 326.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

AOYAMA TRADING  vs.  KURITA WTR INDUNSPADR

AOYAMA TRADING

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

KURITA WTR INDUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KURITA WTR INDUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, KURITA WTR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AOYAMA TRADING and KURITA WTR

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

The idea behind AOYAMA TRADING and KURITA WTR INDUNSPADR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.