Correlation Between First State and BANDAI NAMCO

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

By analyzing existing cross correlation between First State Financial and BANDAI NAMCO Holdings, you can compare the effects of market volatilities on First State and BANDAI NAMCO 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 First State with a short position of BANDAI NAMCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of First State and BANDAI NAMCO.

Diversification Opportunities for First State and BANDAI NAMCO

0.0

Correlation Coefficient

First State  BANDAI NAMCO

Pay attention - limited upside

The 3 months correlation between First and BANDAI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial and BANDAI NAMCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANDAI NAMCO Holdings and First State 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 First State Financial are associated (or correlated) with BANDAI NAMCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANDAI NAMCO Holdings has no effect on the direction of First State i.e., First State and BANDAI NAMCO go up and down completely randomly.

Pair Corralation between First State and BANDAI NAMCO

If you would invest  2,120  in BANDAI NAMCO Holdings on December 28, 2024 and sell it today you would earn a total of  1,338  from holding BANDAI NAMCO Holdings or generate 63.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First State Financial  vs.  BANDAI NAMCO Holdings

First State Financial

Risk-Adjusted Performance

Very Weak

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

BANDAI NAMCO Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BANDAI NAMCO Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, BANDAI NAMCO reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First State and BANDAI NAMCO

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

The idea behind First State Financial and BANDAI NAMCO Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.