Correlation Between Canon Marketing and Seiko Epson

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

Diversification Opportunities for Canon Marketing and Seiko Epson

-0.31

Correlation Coefficient

Canon Marketing  Seiko Epson

Very good diversification

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

Pair Corralation between Canon Marketing and Seiko Epson

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 0.6 times more return on investment than Seiko Epson. However, Canon Marketing Japan is 1.68 times less risky than Seiko Epson. It trades about -0.02 of its potential returns per unit of risk. Seiko Epson is currently generating about -0.1 per unit of risk. If you would invest  3,120  in Canon Marketing Japan on December 20, 2024 and sell it today you would lose (60.00) from holding Canon Marketing Japan or give up 1.92% of portfolio value over 90 days.

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

Canon Marketing Japan  vs.  Seiko Epson

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Seiko Epson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seiko Epson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Canon Marketing and Seiko Epson

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

The idea behind Canon Marketing Japan and Seiko Epson 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.