Correlation Between PICKN PAY and SHIMANO INC

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

By analyzing existing cross correlation between PICKN PAY STORES and SHIMANO INC UNSPADR10, you can compare the effects of market volatilities on PICKN PAY and SHIMANO INC 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 PICKN PAY with a short position of SHIMANO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and SHIMANO INC.

Diversification Opportunities for PICKN PAY and SHIMANO INC

-0.46

Correlation Coefficient

PICKN PAY  SHIMANO INC

Very good diversification

The 3 months correlation between PICKN and SHIMANO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and SHIMANO INC UNSPADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIMANO INC UNSPADR10 and PICKN PAY 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 PICKN PAY STORES are associated (or correlated) with SHIMANO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIMANO INC UNSPADR10 has no effect on the direction of PICKN PAY i.e., PICKN PAY and SHIMANO INC go up and down completely randomly.

Pair Corralation between PICKN PAY and SHIMANO INC

Assuming the 90 days trading horizon PICKN PAY STORES is expected to generate 1.06 times more return on investment than SHIMANO INC. However, PICKN PAY is 1.06 times more volatile than SHIMANO INC UNSPADR10. It trades about 0.19 of its potential returns per unit of risk. SHIMANO INC UNSPADR10 is currently generating about -0.07 per unit of risk. If you would invest  113.00  in PICKN PAY STORES on September 13, 2024 and sell it today you would earn a total of  44.00  from holding PICKN PAY STORES or generate 38.94% return on investment over 90 days.

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

PICKN PAY STORES  vs.  SHIMANO INC UNSPADR10

PICKN PAY STORES

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PICKN PAY STORES are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PICKN PAY unveiled solid returns over the last few months and may actually be approaching a breakup point.

SHIMANO INC UNSPADR10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIMANO INC UNSPADR10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary 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 PICKN PAY and SHIMANO INC

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

The idea behind PICKN PAY STORES and SHIMANO INC UNSPADR10 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.