Correlation Between Obayashi and 191216CM0

Can any of the company-specific risk be diversified away by investing in both Obayashi and 191216CM0 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 Obayashi and 191216CM0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Obayashi and COCA COLA CO, you can compare the effects of market volatilities on Obayashi and 191216CM0 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 Obayashi with a short position of 191216CM0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obayashi and 191216CM0.

Diversification Opportunities for Obayashi and 191216CM0

0.24

Correlation Coefficient

Obayashi  191216CM0

Modest diversification

The 3 months correlation between Obayashi and 191216CM0 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Obayashi and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO and Obayashi 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 Obayashi are associated (or correlated) with 191216CM0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Obayashi i.e., Obayashi and 191216CM0 go up and down completely randomly.

Pair Corralation between Obayashi and 191216CM0

Assuming the 90 days horizon Obayashi is expected to under-perform the 191216CM0. In addition to that, Obayashi is 60.15 times more volatile than COCA COLA CO. It trades about -0.17 of its total potential returns per unit of risk. COCA COLA CO is currently generating about -0.07 per unit of volatility. If you would invest  8,977  in COCA COLA CO on December 30, 2024 and sell it today you would lose (287.00) from holding COCA COLA CO or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Obayashi  vs.  COCA COLA CO

Obayashi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Obayashi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COCA A CO

Risk-Adjusted Performance

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CM0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Obayashi and 191216CM0

The main advantage of trading using opposite Obayashi and 191216CM0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Obayashi position performs unexpectedly, 191216CM0 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 191216CM0 will offset losses from the drop in 191216CM0's long position.

The idea behind Obayashi and COCA COLA CO 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.