Correlation Between Canon Marketing and MISUMI GROUP

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

Diversification Opportunities for Canon Marketing and MISUMI GROUP

-0.21

Correlation Coefficient

Canon Marketing  MISUMI GROUP

Very good diversification

The 3 months correlation between Canon and MISUMI is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and MISUMI GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MISUMI GROUP INC 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 MISUMI GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MISUMI GROUP INC has no effect on the direction of Canon Marketing i.e., Canon Marketing and MISUMI GROUP go up and down completely randomly.

Pair Corralation between Canon Marketing and MISUMI GROUP

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 0.57 times more return on investment than MISUMI GROUP. However, Canon Marketing Japan is 1.77 times less risky than MISUMI GROUP. It trades about 0.18 of its potential returns per unit of risk. MISUMI GROUP INC is currently generating about -0.05 per unit of risk. If you would invest  2,620  in Canon Marketing Japan on October 24, 2024 and sell it today you would earn a total of  360.00  from holding Canon Marketing Japan or generate 13.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Canon Marketing Japan  vs.  MISUMI GROUP INC

Canon Marketing Japan

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Canon Marketing reported solid returns over the last few months and may actually be approaching a breakup point.

MISUMI GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MISUMI GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Canon Marketing and MISUMI GROUP

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

The idea behind Canon Marketing Japan and MISUMI GROUP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.