Correlation Between Kawasaki Heavy and Konica Minolta

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

By analyzing existing cross correlation between Kawasaki Heavy Industries and Konica Minolta, you can compare the effects of market volatilities on Kawasaki Heavy and Konica Minolta 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 Kawasaki Heavy with a short position of Konica Minolta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasaki Heavy and Konica Minolta.

Diversification Opportunities for Kawasaki Heavy and Konica Minolta

-0.87

Correlation Coefficient

Kawasaki Heavy  Konica Minolta

Pay attention - limited upside

The 3 months correlation between Kawasaki and Konica is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kawasaki Heavy Industries and Konica Minolta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konica Minolta and Kawasaki Heavy 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 Kawasaki Heavy Industries are associated (or correlated) with Konica Minolta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konica Minolta has no effect on the direction of Kawasaki Heavy i.e., Kawasaki Heavy and Konica Minolta go up and down completely randomly.

Pair Corralation between Kawasaki Heavy and Konica Minolta

Assuming the 90 days horizon Kawasaki Heavy Industries is expected to generate 1.14 times more return on investment than Konica Minolta. However, Kawasaki Heavy is 1.14 times more volatile than Konica Minolta. It trades about 0.17 of its potential returns per unit of risk. Konica Minolta is currently generating about -0.16 per unit of risk. If you would invest  1,994  in Kawasaki Heavy Industries on December 10, 2024 and sell it today you would earn a total of  271.00  from holding Kawasaki Heavy Industries or generate 13.59% return on investment over 90 days.

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

Kawasaki Heavy Industries  vs.  Konica Minolta

Kawasaki Heavy Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasaki Heavy Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Kawasaki Heavy showed solid returns over the last few months and may actually be approaching a breakup point.

Konica Minolta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Konica Minolta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kawasaki Heavy and Konica Minolta

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

The idea behind Kawasaki Heavy Industries and Konica Minolta 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.