Correlation Between Canon Marketing and SIDETRADE

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

By analyzing existing cross correlation between Canon Marketing Japan and SIDETRADE EO 1, you can compare the effects of market volatilities on Canon Marketing and SIDETRADE 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 Canon Marketing with a short position of SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon Marketing and SIDETRADE.

Diversification Opportunities for Canon Marketing and SIDETRADE

-0.31

Correlation Coefficient

Canon Marketing  SIDETRADE

Very good diversification

The 3 months correlation between Canon and SIDETRADE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 and Canon Marketing 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 Canon Marketing Japan are associated (or correlated) with SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Canon Marketing i.e., Canon Marketing and SIDETRADE go up and down completely randomly.

Pair Corralation between Canon Marketing and SIDETRADE

Assuming the 90 days horizon Canon Marketing Japan is expected to under-perform the SIDETRADE. But the stock apears to be less risky and, when comparing its historical volatility, Canon Marketing Japan is 1.39 times less risky than SIDETRADE. The stock trades about -0.24 of its potential returns per unit of risk. The SIDETRADE EO 1 is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  21,400  in SIDETRADE EO 1 on October 21, 2024 and sell it today you would earn a total of  1,600  from holding SIDETRADE EO 1 or generate 7.48% return on investment over 90 days.

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

Canon Marketing Japan  vs.  SIDETRADE EO 1

Canon Marketing Japan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canon Marketing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SIDETRADE EO 1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Canon Marketing and SIDETRADE

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

The idea behind Canon Marketing Japan and SIDETRADE EO 1 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.