Correlation Between Alaska Power and Marubeni

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

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

Diversification Opportunities for Alaska Power and Marubeni

0.29

Correlation Coefficient

Alaska Power  Marubeni

Modest diversification

The 3 months correlation between Alaska and Marubeni is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Power Telephone and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni and Alaska Power 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 Alaska Power Telephone are associated (or correlated) with Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Alaska Power i.e., Alaska Power and Marubeni go up and down completely randomly.

Pair Corralation between Alaska Power and Marubeni

Given the investment horizon of 90 days Alaska Power is expected to generate 3.76 times less return on investment than Marubeni. But when comparing it to its historical volatility, Alaska Power Telephone is 2.79 times less risky than Marubeni. It trades about 0.06 of its potential returns per unit of risk. Marubeni is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,470  in Marubeni on December 29, 2024 and sell it today you would earn a total of  180.00  from holding Marubeni or generate 12.24% return on investment over 90 days.

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

Alaska Power Telephone  vs.  Marubeni

Alaska Power Telephone

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Power Telephone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Alaska Power is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Marubeni

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marubeni are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Marubeni reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alaska Power and Marubeni

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

The idea behind Alaska Power Telephone and Marubeni 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.