Correlation Between NGK Insulators and Komori

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

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

Diversification Opportunities for NGK Insulators and Komori

0.19

Correlation Coefficient

NGK Insulators  Komori

Average diversification

The 3 months correlation between NGK and Komori is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NGK Insulators and Komori in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komori and NGK Insulators 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 NGK Insulators are associated (or correlated) with Komori. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komori has no effect on the direction of NGK Insulators i.e., NGK Insulators and Komori go up and down completely randomly.

Pair Corralation between NGK Insulators and Komori

If you would invest  1,246  in NGK Insulators on September 14, 2024 and sell it today you would earn a total of  44.00  from holding NGK Insulators or generate 3.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.49%
Values	Daily Returns

NGK Insulators  vs.  Komori

NGK Insulators

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NGK Insulators are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, NGK Insulators reported solid returns over the last few months and may actually be approaching a breakup point.

Komori

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NGK Insulators and Komori

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

The idea behind NGK Insulators and Komori 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 Anywhere module to track or share privately all of your investments from the convenience of any device.