Correlation Between Canon Marketing and PERENNIAL ENERGY

Can any of the company-specific risk be diversified away by investing in both Canon Marketing and PERENNIAL ENERGY 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 PERENNIAL ENERGY 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 PERENNIAL ENERGY HD 01, you can compare the effects of market volatilities on Canon Marketing and PERENNIAL ENERGY 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 PERENNIAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon Marketing and PERENNIAL ENERGY.

Diversification Opportunities for Canon Marketing and PERENNIAL ENERGY

-0.58

Correlation Coefficient

Canon Marketing  PERENNIAL ENERGY

Excellent diversification

The 3 months correlation between Canon and PERENNIAL is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and PERENNIAL ENERGY HD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERENNIAL ENERGY 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 PERENNIAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERENNIAL ENERGY has no effect on the direction of Canon Marketing i.e., Canon Marketing and PERENNIAL ENERGY go up and down completely randomly.

Pair Corralation between Canon Marketing and PERENNIAL ENERGY

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 0.33 times more return on investment than PERENNIAL ENERGY. However, Canon Marketing Japan is 3.07 times less risky than PERENNIAL ENERGY. It trades about -0.02 of its potential returns per unit of risk. PERENNIAL ENERGY HD 01 is currently generating about -0.01 per unit of risk. If you would invest  3,100  in Canon Marketing Japan on December 22, 2024 and sell it today you would lose (60.00) from holding Canon Marketing Japan or give up 1.94% of portfolio value over 90 days.

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

Canon Marketing Japan  vs.  PERENNIAL ENERGY HD 01

Canon Marketing Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canon Marketing Japan has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

PERENNIAL ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days PERENNIAL ENERGY HD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PERENNIAL ENERGY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Canon Marketing and PERENNIAL ENERGY

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

The idea behind Canon Marketing Japan and PERENNIAL ENERGY HD 01 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.