Correlation Between Canon Marketing and KEISEI EL

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

Diversification Opportunities for Canon Marketing and KEISEI EL

0.64

Correlation Coefficient

Canon Marketing  KEISEI EL

Poor diversification

The 3 months correlation between Canon and KEISEI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and KEISEI EL RAILWAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEISEI EL RAILWAY 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 KEISEI EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEISEI EL RAILWAY has no effect on the direction of Canon Marketing i.e., Canon Marketing and KEISEI EL go up and down completely randomly.

Pair Corralation between Canon Marketing and KEISEI EL

Assuming the 90 days horizon Canon Marketing Japan is expected to under-perform the KEISEI EL. But the stock apears to be less risky and, when comparing its historical volatility, Canon Marketing Japan is 1.13 times less risky than KEISEI EL. The stock trades about -0.13 of its potential returns per unit of risk. The KEISEI EL RAILWAY is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  827.00  in KEISEI EL RAILWAY on October 15, 2024 and sell it today you would earn a total of  38.00  from holding KEISEI EL RAILWAY or generate 4.59% return on investment over 90 days.

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

Canon Marketing Japan  vs.  KEISEI EL RAILWAY

Canon Marketing Japan

Risk-Adjusted Performance

3 of 100

Insignificant

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

KEISEI EL RAILWAY

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KEISEI EL RAILWAY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, KEISEI EL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Canon Marketing and KEISEI EL

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

The idea behind Canon Marketing Japan and KEISEI EL RAILWAY 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.