Correlation Between Canon and Advanced Info

Can any of the company-specific risk be diversified away by investing in both Canon and Advanced Info 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 and Advanced Info into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canon Inc and Advanced Info Service, you can compare the effects of market volatilities on Canon and Advanced Info 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 with a short position of Advanced Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and Advanced Info.

Diversification Opportunities for Canon and Advanced Info

0.71

Correlation Coefficient

Canon  Advanced Info

Poor diversification

The 3 months correlation between Canon and Advanced is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service and Canon 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 Inc are associated (or correlated) with Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Canon i.e., Canon and Advanced Info go up and down completely randomly.

Pair Corralation between Canon and Advanced Info

Assuming the 90 days trading horizon Canon Inc is expected to generate 1.15 times more return on investment than Advanced Info. However, Canon is 1.15 times more volatile than Advanced Info Service. It trades about 0.05 of its potential returns per unit of risk. Advanced Info Service is currently generating about 0.06 per unit of risk. If you would invest  2,070  in Canon Inc on October 22, 2024 and sell it today you would earn a total of  1,003  from holding Canon Inc or generate 48.45% return on investment over 90 days.

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

Canon Inc  vs.  Advanced Info Service

Canon Inc

Risk-Adjusted Performance

0 of 100

Weak

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

Advanced Info Service

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Advanced Info may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Canon and Advanced Info

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

The idea behind Canon Inc and Advanced Info Service 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..