Correlation Between MISUMI GROUP and Techtronic Industries

Can any of the company-specific risk be diversified away by investing in both MISUMI GROUP and Techtronic Industries 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 Techtronic Industries 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 Techtronic Industries, you can compare the effects of market volatilities on MISUMI GROUP and Techtronic Industries 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 Techtronic Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of MISUMI GROUP and Techtronic Industries.

Diversification Opportunities for MISUMI GROUP and Techtronic Industries

-0.34

Correlation Coefficient

MISUMI GROUP  Techtronic Industries

Very good diversification

The 3 months correlation between MISUMI and Techtronic is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding MISUMI GROUP INC and Techtronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techtronic Industries 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 Techtronic Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techtronic Industries has no effect on the direction of MISUMI GROUP i.e., MISUMI GROUP and Techtronic Industries go up and down completely randomly.

Pair Corralation between MISUMI GROUP and Techtronic Industries

Assuming the 90 days horizon MISUMI GROUP INC is expected to generate 1.13 times more return on investment than Techtronic Industries. However, MISUMI GROUP is 1.13 times more volatile than Techtronic Industries. It trades about 0.07 of its potential returns per unit of risk. Techtronic Industries is currently generating about -0.07 per unit of risk. If you would invest  1,450  in MISUMI GROUP INC on December 24, 2024 and sell it today you would earn a total of  140.00  from holding MISUMI GROUP INC or generate 9.66% return on investment over 90 days.

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

MISUMI GROUP INC  vs.  Techtronic Industries

MISUMI GROUP INC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MISUMI GROUP INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MISUMI GROUP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Techtronic Industries

Risk-Adjusted Performance

Very Weak

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

Pair Trading with MISUMI GROUP and Techtronic Industries

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

The idea behind MISUMI GROUP INC and Techtronic Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..