Correlation Between BANDAI NAMCO and Canlan Ice

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

By analyzing existing cross correlation between BANDAI NAMCO Holdings and Canlan Ice Sports, you can compare the effects of market volatilities on BANDAI NAMCO and Canlan Ice 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 BANDAI NAMCO with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANDAI NAMCO and Canlan Ice.

Diversification Opportunities for BANDAI NAMCO and Canlan Ice

-0.14

Correlation Coefficient

BANDAI NAMCO  Canlan Ice

Good diversification

The 3 months correlation between BANDAI and Canlan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BANDAI NAMCO Holdings and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and BANDAI NAMCO 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 BANDAI NAMCO Holdings are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of BANDAI NAMCO i.e., BANDAI NAMCO and Canlan Ice go up and down completely randomly.

Pair Corralation between BANDAI NAMCO and Canlan Ice

Assuming the 90 days horizon BANDAI NAMCO Holdings is expected to generate 177.63 times more return on investment than Canlan Ice. However, BANDAI NAMCO is 177.63 times more volatile than Canlan Ice Sports. It trades about 0.04 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.13 per unit of risk. If you would invest  6,148  in BANDAI NAMCO Holdings on September 27, 2024 and sell it today you would lose (4,028) from holding BANDAI NAMCO Holdings or give up 65.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.72%
Values	Daily Returns

BANDAI NAMCO Holdings  vs.  Canlan Ice Sports

BANDAI NAMCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Canlan Ice Sports

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BANDAI NAMCO and Canlan Ice

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

The idea behind BANDAI NAMCO Holdings and Canlan Ice Sports 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.