Correlation Between Dentsply Sirona and KOBE STEEL

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

By analyzing existing cross correlation between Dentsply Sirona and KOBE STEEL LTD, you can compare the effects of market volatilities on Dentsply Sirona and KOBE STEEL 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 Dentsply Sirona with a short position of KOBE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dentsply Sirona and KOBE STEEL.

Diversification Opportunities for Dentsply Sirona and KOBE STEEL

-0.63

Correlation Coefficient

Dentsply Sirona  KOBE STEEL

Excellent diversification

The 3 months correlation between Dentsply and KOBE is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and KOBE STEEL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOBE STEEL LTD and Dentsply Sirona 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 Dentsply Sirona are associated (or correlated) with KOBE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOBE STEEL LTD has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and KOBE STEEL go up and down completely randomly.

Pair Corralation between Dentsply Sirona and KOBE STEEL

Assuming the 90 days horizon Dentsply Sirona is expected to under-perform the KOBE STEEL. But the stock apears to be less risky and, when comparing its historical volatility, Dentsply Sirona is 1.1 times less risky than KOBE STEEL. The stock trades about -0.18 of its potential returns per unit of risk. The KOBE STEEL LTD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  902.00  in KOBE STEEL LTD on December 22, 2024 and sell it today you would earn a total of  259.00  from holding KOBE STEEL LTD or generate 28.71% return on investment over 90 days.

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

Dentsply Sirona  vs.  KOBE STEEL LTD

Dentsply Sirona

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

KOBE STEEL LTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KOBE STEEL LTD are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KOBE STEEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsply Sirona and KOBE STEEL

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

The idea behind Dentsply Sirona and KOBE STEEL LTD 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.