Correlation Between Keyence and Global Warming

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

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

Diversification Opportunities for Keyence and Global Warming

0.13

Correlation Coefficient

Keyence  Global Warming

Average diversification

The 3 months correlation between Keyence and Global is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and Global Warming Solut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Warming Solut and Keyence 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 Keyence are associated (or correlated) with Global Warming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Warming Solut has no effect on the direction of Keyence i.e., Keyence and Global Warming go up and down completely randomly.

Pair Corralation between Keyence and Global Warming

Assuming the 90 days horizon Keyence is expected to generate 13473.0 times less return on investment than Global Warming. But when comparing it to its historical volatility, Keyence is 11.87 times less risky than Global Warming. It trades about 0.0 of its potential returns per unit of risk. Global Warming Solut is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  345.00  in Global Warming Solut on December 5, 2024 and sell it today you would lose (268.00) from holding Global Warming Solut or give up 77.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Keyence  vs.  Global Warming Solut

Keyence

Risk-Adjusted Performance

Very Weak

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

Global Warming Solut

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Warming Solut has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Keyence and Global Warming

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

The idea behind Keyence and Global Warming Solut 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.