Correlation Between Ibiden CoLtd and SCANDMEDICAL SOLDK

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

By analyzing existing cross correlation between Ibiden CoLtd and SCANDMEDICAL SOLDK 040, you can compare the effects of market volatilities on Ibiden CoLtd and SCANDMEDICAL SOLDK 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 Ibiden CoLtd with a short position of SCANDMEDICAL SOLDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ibiden CoLtd and SCANDMEDICAL SOLDK.

Diversification Opportunities for Ibiden CoLtd and SCANDMEDICAL SOLDK

0.07

Correlation Coefficient

Ibiden CoLtd  SCANDMEDICAL SOLDK

Significant diversification

The 3 months correlation between Ibiden and SCANDMEDICAL is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ibiden CoLtd and SCANDMEDICAL SOLDK 040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANDMEDICAL SOLDK 040 and Ibiden CoLtd 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 Ibiden CoLtd are associated (or correlated) with SCANDMEDICAL SOLDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANDMEDICAL SOLDK 040 has no effect on the direction of Ibiden CoLtd i.e., Ibiden CoLtd and SCANDMEDICAL SOLDK go up and down completely randomly.

Pair Corralation between Ibiden CoLtd and SCANDMEDICAL SOLDK

Assuming the 90 days horizon Ibiden CoLtd is expected to generate 1.0 times more return on investment than SCANDMEDICAL SOLDK. However, Ibiden CoLtd is 1.0 times more volatile than SCANDMEDICAL SOLDK 040. It trades about 0.05 of its potential returns per unit of risk. SCANDMEDICAL SOLDK 040 is currently generating about -0.05 per unit of risk. If you would invest  2,940  in Ibiden CoLtd on October 27, 2024 and sell it today you would earn a total of  180.00  from holding Ibiden CoLtd or generate 6.12% return on investment over 90 days.

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

Ibiden CoLtd  vs.  SCANDMEDICAL SOLDK 040

Ibiden CoLtd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ibiden CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Ibiden CoLtd may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SCANDMEDICAL SOLDK 040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCANDMEDICAL SOLDK 040 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ibiden CoLtd and SCANDMEDICAL SOLDK

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

The idea behind Ibiden CoLtd and SCANDMEDICAL SOLDK 040 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.