Correlation Between Maschinenfabrik Berthold and Canon

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

By analyzing existing cross correlation between Maschinenfabrik Berthold Hermle and Canon Inc, you can compare the effects of market volatilities on Maschinenfabrik Berthold and Canon 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 Maschinenfabrik Berthold with a short position of Canon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maschinenfabrik Berthold and Canon.

Diversification Opportunities for Maschinenfabrik Berthold and Canon

-0.29

Correlation Coefficient

Maschinenfabrik Berthold  Canon

Very good diversification

The 3 months correlation between Maschinenfabrik and Canon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Maschinenfabrik Berthold Herml and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc and Maschinenfabrik Berthold 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 Maschinenfabrik Berthold Hermle are associated (or correlated) with Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of Maschinenfabrik Berthold i.e., Maschinenfabrik Berthold and Canon go up and down completely randomly.

Pair Corralation between Maschinenfabrik Berthold and Canon

Assuming the 90 days trading horizon Maschinenfabrik Berthold Hermle is expected to under-perform the Canon. In addition to that, Maschinenfabrik Berthold is 1.23 times more volatile than Canon Inc. It trades about -0.14 of its total potential returns per unit of risk. Canon Inc is currently generating about -0.02 per unit of volatility. If you would invest  3,136  in Canon Inc on October 18, 2024 and sell it today you would lose (87.00) from holding Canon Inc or give up 2.77% of portfolio value over 90 days.

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

Maschinenfabrik Berthold Herml  vs.  Canon Inc

Maschinenfabrik Berthold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maschinenfabrik Berthold Hermle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Canon Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Maschinenfabrik Berthold and Canon

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

The idea behind Maschinenfabrik Berthold Hermle and Canon Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.