Correlation Between Shimadzu and Garmin

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

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

Diversification Opportunities for Shimadzu and Garmin

0.33

Correlation Coefficient

Shimadzu  Garmin

Weak diversification

The 3 months correlation between Shimadzu and Garmin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shimadzu and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin 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 Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of Shimadzu i.e., Shimadzu and Garmin go up and down completely randomly.

Pair Corralation between Shimadzu and Garmin

Assuming the 90 days horizon Shimadzu is expected to under-perform the Garmin. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shimadzu is 1.41 times less risky than Garmin. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Garmin is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,828  in Garmin on September 20, 2024 and sell it today you would earn a total of  11,741  from holding Garmin or generate 133.0% return on investment over 90 days.

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

Shimadzu  vs.  Garmin

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.

Garmin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shimadzu and Garmin

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

The idea behind Shimadzu and Garmin 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.