Correlation Between PVH Corp and Chiba Bank

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

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

Diversification Opportunities for PVH Corp and Chiba Bank

-0.18

Correlation Coefficient

PVH Corp  Chiba Bank

Good diversification

The 3 months correlation between PVH and Chiba is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PVH Corp and Chiba Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank and PVH 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 PVH Corp are associated (or correlated) with Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of PVH Corp i.e., PVH Corp and Chiba Bank go up and down completely randomly.

Pair Corralation between PVH Corp and Chiba Bank

Considering the 90-day investment horizon PVH Corp is expected to generate 2.02 times more return on investment than Chiba Bank. However, PVH Corp is 2.02 times more volatile than Chiba Bank Ltd. It trades about 0.09 of its potential returns per unit of risk. Chiba Bank Ltd is currently generating about 0.03 per unit of risk. If you would invest  9,691  in PVH Corp on September 22, 2024 and sell it today you would earn a total of  1,054  from holding PVH Corp or generate 10.88% return on investment over 90 days.

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

PVH Corp  vs.  Chiba Bank Ltd

PVH Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PVH Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, PVH Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Chiba Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chiba Bank Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chiba Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PVH Corp and Chiba Bank

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

The idea behind PVH Corp and Chiba Bank Ltd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.