Correlation Between OMRON Corp and Keyence

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

Diversification Opportunities for OMRON Corp and Keyence

0.38

Correlation Coefficient

OMRON Corp  Keyence

Weak diversification

The 3 months correlation between OMRON and Keyence is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding OMRON Corp ADR and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence 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 Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of OMRON Corp i.e., OMRON Corp and Keyence go up and down completely randomly.

Pair Corralation between OMRON Corp and Keyence

Assuming the 90 days horizon OMRON Corp ADR is expected to generate 0.84 times more return on investment than Keyence. However, OMRON Corp ADR is 1.19 times less risky than Keyence. It trades about -0.05 of its potential returns per unit of risk. Keyence is currently generating about -0.06 per unit of risk. If you would invest  3,214  in OMRON Corp ADR on December 4, 2024 and sell it today you would lose (232.00) from holding OMRON Corp ADR or give up 7.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

OMRON Corp ADR  vs.  Keyence

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.

Keyence

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keyence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental indicators 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 OMRON Corp and Keyence

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

The idea behind OMRON Corp ADR and Keyence 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .