Correlation Between Monotaro and Delivery Hero

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

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

Diversification Opportunities for Monotaro and Delivery Hero

-0.47

Correlation Coefficient

Monotaro  Delivery Hero

Very good diversification

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

Pair Corralation between Monotaro and Delivery Hero

Assuming the 90 days horizon Monotaro Co is expected to generate 0.64 times more return on investment than Delivery Hero. However, Monotaro Co is 1.57 times less risky than Delivery Hero. It trades about 0.09 of its potential returns per unit of risk. Delivery Hero SE is currently generating about -0.03 per unit of risk. If you would invest  1,700  in Monotaro Co on December 30, 2024 and sell it today you would earn a total of  214.00  from holding Monotaro Co or generate 12.59% return on investment over 90 days.

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

Monotaro Co  vs.  Delivery Hero SE

Monotaro

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monotaro Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Monotaro showed solid returns over the last few months and may actually be approaching a breakup point.

Delivery Hero SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delivery Hero SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Monotaro and Delivery Hero

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

The idea behind Monotaro Co and Delivery Hero SE 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.