Correlation Between MISUMI GROUP and AB SKF

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

By analyzing existing cross correlation between MISUMI GROUP INC and AB SKF, you can compare the effects of market volatilities on MISUMI GROUP and AB SKF 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 MISUMI GROUP with a short position of AB SKF. Check out your portfolio center. Please also check ongoing floating volatility patterns of MISUMI GROUP and AB SKF.

Diversification Opportunities for MISUMI GROUP and AB SKF

-0.07

Correlation Coefficient

MISUMI GROUP  AB SKF

Good diversification

The 3 months correlation between MISUMI and SKFA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding MISUMI GROUP INC and AB SKF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SKF and MISUMI GROUP 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 MISUMI GROUP INC are associated (or correlated) with AB SKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SKF has no effect on the direction of MISUMI GROUP i.e., MISUMI GROUP and AB SKF go up and down completely randomly.

Pair Corralation between MISUMI GROUP and AB SKF

Assuming the 90 days horizon MISUMI GROUP INC is expected to generate 1.08 times more return on investment than AB SKF. However, MISUMI GROUP is 1.08 times more volatile than AB SKF. It trades about -0.17 of its potential returns per unit of risk. AB SKF is currently generating about -0.32 per unit of risk. If you would invest  1,530  in MISUMI GROUP INC on October 8, 2024 and sell it today you would lose (60.00) from holding MISUMI GROUP INC or give up 3.92% of portfolio value over 90 days.

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

MISUMI GROUP INC  vs.  AB SKF

MISUMI GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

AB SKF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AB SKF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, AB SKF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MISUMI GROUP and AB SKF

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

The idea behind MISUMI GROUP INC and AB SKF 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.