Correlation Between Data IO and OMRON Corp

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

By analyzing existing cross correlation between Data IO and OMRON Corp ADR, you can compare the effects of market volatilities on Data IO and OMRON Corp 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 Data IO with a short position of OMRON Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data IO and OMRON Corp.

Diversification Opportunities for Data IO and OMRON Corp

0.29

Correlation Coefficient

Data IO  OMRON Corp

Modest diversification

The 3 months correlation between Data and OMRON is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Data IO and OMRON Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMRON Corp ADR and Data IO 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 Data IO are associated (or correlated) with OMRON Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMRON Corp ADR has no effect on the direction of Data IO i.e., Data IO and OMRON Corp go up and down completely randomly.

Pair Corralation between Data IO and OMRON Corp

Given the investment horizon of 90 days Data IO is expected to generate 1.53 times more return on investment than OMRON Corp. However, Data IO is 1.53 times more volatile than OMRON Corp ADR. It trades about -0.06 of its potential returns per unit of risk. OMRON Corp ADR is currently generating about -0.11 per unit of risk. If you would invest  276.00  in Data IO on December 27, 2024 and sell it today you would lose (33.00) from holding Data IO or give up 11.96% of portfolio value over 90 days.

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

Data IO  vs.  OMRON Corp ADR

Data IO

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data IO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

OMRON Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days OMRON Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Data IO and OMRON Corp

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

The idea behind Data IO and OMRON Corp ADR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.