Correlation Between Amada and Ushio

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

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

Diversification Opportunities for Amada and Ushio

0.33

Correlation Coefficient

Amada  Ushio

Weak diversification

The 3 months correlation between Amada and Ushio is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Amada Co and Ushio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ushio Inc and Amada 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 Amada Co are associated (or correlated) with Ushio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ushio Inc has no effect on the direction of Amada i.e., Amada and Ushio go up and down completely randomly.

Pair Corralation between Amada and Ushio

Assuming the 90 days horizon Amada Co is expected to under-perform the Ushio. In addition to that, Amada is 12.58 times more volatile than Ushio Inc. It trades about -0.13 of its total potential returns per unit of risk. Ushio Inc is currently generating about 0.01 per unit of volatility. If you would invest  1,302  in Ushio Inc on September 15, 2024 and sell it today you would lose (2.00) from holding Ushio Inc or give up 0.15% of portfolio value over 90 days.

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

Amada Co  vs.  Ushio Inc

Amada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amada Co 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ushio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amada and Ushio

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

The idea behind Amada Co and Ushio 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.