Correlation Between Shimano and Trip Group

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

By analyzing existing cross correlation between Shimano and Trip Group Limited, you can compare the effects of market volatilities on Shimano and Trip Group 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 Shimano with a short position of Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shimano and Trip Group.

Diversification Opportunities for Shimano and Trip Group

-0.17

Correlation Coefficient

Shimano  Trip Group

Good diversification

The 3 months correlation between Shimano and Trip is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Shimano and Trip Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group Limited and Shimano 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 Shimano are associated (or correlated) with Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group Limited has no effect on the direction of Shimano i.e., Shimano and Trip Group go up and down completely randomly.

Pair Corralation between Shimano and Trip Group

Assuming the 90 days horizon Shimano is expected to generate 0.51 times more return on investment than Trip Group. However, Shimano is 1.97 times less risky than Trip Group. It trades about 0.07 of its potential returns per unit of risk. Trip Group Limited is currently generating about -0.03 per unit of risk. If you would invest  12,710  in Shimano on December 29, 2024 and sell it today you would earn a total of  860.00  from holding Shimano or generate 6.77% return on investment over 90 days.

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

Shimano  vs.  Trip Group Limited

Shimano

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shimano are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shimano may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Trip Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trip Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Trip Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shimano and Trip Group

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

The idea behind Shimano and Trip Group Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.