Correlation Between KOMATSU and QUALIGEN THERNEW

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

By analyzing existing cross correlation between KOMATSU LTD SPONS and QUALIGEN THERNEW DL 001, you can compare the effects of market volatilities on KOMATSU and QUALIGEN THERNEW 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 KOMATSU with a short position of QUALIGEN THERNEW. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOMATSU and QUALIGEN THERNEW.

Diversification Opportunities for KOMATSU and QUALIGEN THERNEW

-0.48

Correlation Coefficient

KOMATSU  QUALIGEN THERNEW

Very good diversification

The 3 months correlation between KOMATSU and QUALIGEN is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding KOMATSU LTD SPONS and QUALIGEN THERNEW DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALIGEN THERNEW and KOMATSU 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 KOMATSU LTD SPONS are associated (or correlated) with QUALIGEN THERNEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALIGEN THERNEW has no effect on the direction of KOMATSU i.e., KOMATSU and QUALIGEN THERNEW go up and down completely randomly.

Pair Corralation between KOMATSU and QUALIGEN THERNEW

Assuming the 90 days trading horizon KOMATSU LTD SPONS is expected to generate 0.16 times more return on investment than QUALIGEN THERNEW. However, KOMATSU LTD SPONS is 6.25 times less risky than QUALIGEN THERNEW. It trades about 0.05 of its potential returns per unit of risk. QUALIGEN THERNEW DL 001 is currently generating about -0.01 per unit of risk. If you would invest  1,805  in KOMATSU LTD SPONS on September 28, 2024 and sell it today you would earn a total of  795.00  from holding KOMATSU LTD SPONS or generate 44.04% return on investment over 90 days.

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

KOMATSU LTD SPONS  vs.  QUALIGEN THERNEW DL 001

KOMATSU LTD SPONS

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KOMATSU LTD SPONS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady primary indicators, KOMATSU may actually be approaching a critical reversion point that can send shares even higher in January 2025.

QUALIGEN THERNEW

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QUALIGEN THERNEW DL 001 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QUALIGEN THERNEW reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KOMATSU and QUALIGEN THERNEW

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

The idea behind KOMATSU LTD SPONS and QUALIGEN THERNEW DL 001 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.