Correlation Between Medirom Healthcare and HR Block

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Can any of the company-specific risk be diversified away by investing in both Medirom Healthcare and HR Block 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 Medirom Healthcare and HR Block into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medirom Healthcare Technologies and HR Block, you can compare the effects of market volatilities on Medirom Healthcare and HR Block 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 Medirom Healthcare with a short position of HR Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medirom Healthcare and HR Block.

Diversification Opportunities for Medirom Healthcare and HR Block

MediromHRBDiversified AwayMediromHRBDiversified Away100%
0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Medirom and HRB is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Medirom Healthcare Technologie and HR Block in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HR Block and Medirom Healthcare 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 Medirom Healthcare Technologies are associated (or correlated) with HR Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HR Block has no effect on the direction of Medirom Healthcare i.e., Medirom Healthcare and HR Block go up and down completely randomly.

Pair Corralation between Medirom Healthcare and HR Block

Considering the 90-day investment horizon Medirom Healthcare Technologies is expected to under-perform the HR Block. In addition to that, Medirom Healthcare is 4.83 times more volatile than HR Block. It trades about -0.18 of its total potential returns per unit of risk. HR Block is currently generating about -0.12 per unit of volatility. If you would invest  5,970  in HR Block on November 15, 2024 and sell it today you would lose (727.00) from holding HR Block or give up 12.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Medirom Healthcare Technologie  vs.  HR Block

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -60-40-200
JavaScript chart by amCharts 3.21.15MRM HRB
       Timeline  
Medirom Healthcare 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Medirom Healthcare Technologies 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 very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.522.533.5
HR Block 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days HR Block has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb51525354555657585960

Medirom Healthcare and HR Block Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.34-9.99-6.64-3.29-0.04572.655.48.1410.8913.63 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15MRM HRB
       Returns  

Pair Trading with Medirom Healthcare and HR Block

The main advantage of trading using opposite Medirom Healthcare and HR Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medirom Healthcare position performs unexpectedly, HR Block 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 HR Block will offset losses from the drop in HR Block's long position.
The idea behind Medirom Healthcare Technologies and HR Block 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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