Correlation Between H2O Retailing and Canon Marketing
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and Canon Marketing 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 H2O Retailing and Canon Marketing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and Canon Marketing Japan, you can compare the effects of market volatilities on H2O Retailing and Canon Marketing 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 H2O Retailing with a short position of Canon Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Canon Marketing.
Diversification Opportunities for H2O Retailing and Canon Marketing
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between H2O and Canon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and Canon Marketing Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Marketing Japan and H2O Retailing 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 H2O Retailing are associated (or correlated) with Canon Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Marketing Japan has no effect on the direction of H2O Retailing i.e., H2O Retailing and Canon Marketing go up and down completely randomly.
Pair Corralation between H2O Retailing and Canon Marketing
Assuming the 90 days horizon H2O Retailing is expected to generate 1.55 times more return on investment than Canon Marketing. However, H2O Retailing is 1.55 times more volatile than Canon Marketing Japan. It trades about 0.05 of its potential returns per unit of risk. Canon Marketing Japan is currently generating about 0.07 per unit of risk. If you would invest 1,150 in H2O Retailing on October 8, 2024 and sell it today you would earn a total of 210.00 from holding H2O Retailing or generate 18.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
H2O Retailing vs. Canon Marketing Japan
Performance |
Timeline |
H2O Retailing |
Canon Marketing Japan |
H2O Retailing and Canon Marketing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with H2O Retailing and Canon Marketing
The main advantage of trading using opposite H2O Retailing and Canon Marketing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, Canon Marketing 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 Canon Marketing will offset losses from the drop in Canon Marketing's long position.H2O Retailing vs. PEPKOR LTD | H2O Retailing vs. Superior Plus Corp | H2O Retailing vs. NMI Holdings | H2O Retailing vs. SIVERS SEMICONDUCTORS AB |
Canon Marketing vs. Canon Inc | Canon Marketing vs. Canon Inc | Canon Marketing vs. Ricoh Company | Canon Marketing vs. Brother Industries |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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