Correlation Between OMRON Corp and Fanuc

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

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

Diversification Opportunities for OMRON Corp and Fanuc

-0.19

Correlation Coefficient

OMRON Corp  Fanuc

Good diversification

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

Pair Corralation between OMRON Corp and Fanuc

Assuming the 90 days horizon OMRON Corp ADR is expected to under-perform the Fanuc. But the pink sheet apears to be less risky and, when comparing its historical volatility, OMRON Corp ADR is 2.54 times less risky than Fanuc. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Fanuc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,534  in Fanuc on December 4, 2024 and sell it today you would earn a total of  328.00  from holding Fanuc or generate 12.94% return on investment over 90 days.

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

OMRON Corp ADR  vs.  Fanuc

OMRON Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days OMRON Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Fanuc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fanuc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OMRON Corp and Fanuc

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

The idea behind OMRON Corp ADR and Fanuc 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.