Correlation Between Opera and Tokyo Electron

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Can any of the company-specific risk be diversified away by investing in both Opera and Tokyo Electron 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 Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opera and Tokyo Electron, you can compare the effects of market volatilities on Opera and Tokyo Electron 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 Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opera and Tokyo Electron.

Diversification Opportunities for Opera and Tokyo Electron

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Opera and Tokyo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Opera and Tokyo Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of Opera i.e., Opera and Tokyo Electron go up and down completely randomly.

Pair Corralation between Opera and Tokyo Electron

Given the investment horizon of 90 days Opera is expected to generate 1.37 times more return on investment than Tokyo Electron. However, Opera is 1.37 times more volatile than Tokyo Electron. It trades about 0.08 of its potential returns per unit of risk. Tokyo Electron is currently generating about 0.04 per unit of risk. If you would invest  583.00  in Opera on October 23, 2024 and sell it today you would earn a total of  1,245  from holding Opera or generate 213.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Opera  vs.  Tokyo Electron

 Performance 
       Timeline  
Opera 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Opera are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Opera sustained solid returns over the last few months and may actually be approaching a breakup point.
Tokyo Electron 

Risk-Adjusted Performance

5 of 100

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

Opera and Tokyo Electron Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Opera and Tokyo Electron

The main advantage of trading using opposite Opera and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opera position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.
The idea behind Opera and Tokyo Electron 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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