Correlation Between Ryohin Keikaku and Woolworths Holdings

Can any of the company-specific risk be diversified away by investing in both Ryohin Keikaku and Woolworths Holdings 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 Ryohin Keikaku and Woolworths Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ryohin Keikaku Co and Woolworths Holdings Ltd, you can compare the effects of market volatilities on Ryohin Keikaku and Woolworths Holdings 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 Ryohin Keikaku with a short position of Woolworths Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryohin Keikaku and Woolworths Holdings.

Diversification Opportunities for Ryohin Keikaku and Woolworths Holdings

-0.27

Correlation Coefficient

Ryohin Keikaku  Woolworths Holdings

Very good diversification

The 3 months correlation between Ryohin and Woolworths is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ryohin Keikaku Co and Woolworths Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Holdings and Ryohin Keikaku 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 Ryohin Keikaku Co are associated (or correlated) with Woolworths Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Holdings has no effect on the direction of Ryohin Keikaku i.e., Ryohin Keikaku and Woolworths Holdings go up and down completely randomly.

Pair Corralation between Ryohin Keikaku and Woolworths Holdings

Assuming the 90 days horizon Ryohin Keikaku Co is expected to generate 0.91 times more return on investment than Woolworths Holdings. However, Ryohin Keikaku Co is 1.1 times less risky than Woolworths Holdings. It trades about 0.07 of its potential returns per unit of risk. Woolworths Holdings Ltd is currently generating about 0.0 per unit of risk. If you would invest  1,062  in Ryohin Keikaku Co on October 25, 2024 and sell it today you would earn a total of  1,603  from holding Ryohin Keikaku Co or generate 150.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.99%
Values	Daily Returns

Ryohin Keikaku Co  vs.  Woolworths Holdings Ltd

Ryohin Keikaku

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryohin Keikaku Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Ryohin Keikaku showed solid returns over the last few months and may actually be approaching a breakup point.

Woolworths Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woolworths Holdings Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ryohin Keikaku and Woolworths Holdings

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

The idea behind Ryohin Keikaku Co and Woolworths Holdings 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.