Correlation Between Shimadzu and Fortive Corp

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

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

Diversification Opportunities for Shimadzu and Fortive Corp

-0.01

Correlation Coefficient

Shimadzu  Fortive Corp

Good diversification

The 3 months correlation between Shimadzu and Fortive is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Shimadzu and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp and Shimadzu 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 Shimadzu are associated (or correlated) with Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Shimadzu i.e., Shimadzu and Fortive Corp go up and down completely randomly.

Pair Corralation between Shimadzu and Fortive Corp

Assuming the 90 days horizon Shimadzu is expected to under-perform the Fortive Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shimadzu is 1.1 times less risky than Fortive Corp. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Fortive Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,421  in Fortive Corp on September 19, 2024 and sell it today you would earn a total of  1,149  from holding Fortive Corp or generate 17.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Shimadzu  vs.  Fortive Corp

Shimadzu

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimadzu are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shimadzu is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Fortive Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fortive Corp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Shimadzu and Fortive Corp

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

The idea behind Shimadzu and Fortive Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.