Correlation Between Canon Marketing and FORTEC Elektronik

Can any of the company-specific risk be diversified away by investing in both Canon Marketing and FORTEC Elektronik 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 FORTEC Elektronik 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 FORTEC Elektronik AG, you can compare the effects of market volatilities on Canon Marketing and FORTEC Elektronik 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 FORTEC Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon Marketing and FORTEC Elektronik.

Diversification Opportunities for Canon Marketing and FORTEC Elektronik

0.29

Correlation Coefficient

Canon Marketing  FORTEC Elektronik

Modest diversification

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

Pair Corralation between Canon Marketing and FORTEC Elektronik

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 0.5 times more return on investment than FORTEC Elektronik. However, Canon Marketing Japan is 2.0 times less risky than FORTEC Elektronik. It trades about 0.16 of its potential returns per unit of risk. FORTEC Elektronik AG is currently generating about 0.01 per unit of risk. If you would invest  3,100  in Canon Marketing Japan on October 8, 2024 and sell it today you would earn a total of  80.00  from holding Canon Marketing Japan or generate 2.58% return on investment over 90 days.

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

Canon Marketing Japan  vs.  FORTEC Elektronik AG

Canon Marketing Japan

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canon Marketing reported solid returns over the last few months and may actually be approaching a breakup point.

FORTEC Elektronik

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FORTEC Elektronik AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FORTEC Elektronik 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 FORTEC Elektronik

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

The idea behind Canon Marketing Japan and FORTEC Elektronik AG 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.