Correlation Between Idemitsu Kosan and Idemitsu Kosan

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

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

Diversification Opportunities for Idemitsu Kosan and Idemitsu Kosan

0.47

Correlation Coefficient

Idemitsu Kosan  Idemitsu Kosan

Very weak diversification

The 3 months correlation between Idemitsu and Idemitsu is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Idemitsu Kosan CoLtd and Idemitsu Kosan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan and Idemitsu Kosan 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 Idemitsu Kosan CoLtd are associated (or correlated) with Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan has no effect on the direction of Idemitsu Kosan i.e., Idemitsu Kosan and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between Idemitsu Kosan and Idemitsu Kosan

Assuming the 90 days horizon Idemitsu Kosan is expected to generate 3.23 times less return on investment than Idemitsu Kosan. But when comparing it to its historical volatility, Idemitsu Kosan CoLtd is 1.7 times less risky than Idemitsu Kosan. It trades about 0.09 of its potential returns per unit of risk. Idemitsu Kosan Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,239  in Idemitsu Kosan Co on December 22, 2024 and sell it today you would earn a total of  446.00  from holding Idemitsu Kosan Co or generate 36.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Idemitsu Kosan CoLtd  vs.  Idemitsu Kosan Co

Idemitsu Kosan CoLtd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Idemitsu Kosan CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Idemitsu Kosan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Idemitsu Kosan

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Idemitsu Kosan Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Idemitsu Kosan showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Idemitsu Kosan and Idemitsu Kosan

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

The idea behind Idemitsu Kosan CoLtd and Idemitsu Kosan Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.