Correlation Between Opera and Kubota
Can any of the company-specific risk be diversified away by investing in both Opera and Kubota 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 Opera and Kubota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opera and Kubota, you can compare the effects of market volatilities on Opera and Kubota 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 Opera with a short position of Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opera and Kubota.
Diversification Opportunities for Opera and Kubota
Pay attention - limited upside
The 3 months correlation between Opera and Kubota is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Opera and Kubota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kubota and Opera 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 Opera are associated (or correlated) with Kubota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kubota has no effect on the direction of Opera i.e., Opera and Kubota go up and down completely randomly.
Pair Corralation between Opera and Kubota
Given the investment horizon of 90 days Opera is expected to generate 1.61 times more return on investment than Kubota. However, Opera is 1.61 times more volatile than Kubota. It trades about 0.08 of its potential returns per unit of risk. Kubota is currently generating about -0.09 per unit of risk. If you would invest 1,407 in Opera on September 18, 2024 and sell it today you would earn a total of 574.00 from holding Opera or generate 40.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Opera vs. Kubota
Performance |
Timeline |
Opera |
Kubota |
Opera and Kubota Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Opera and Kubota
The main advantage of trading using opposite Opera and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opera position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota's long position.The idea behind Opera and Kubota 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |