Correlation Between Shimano and Hasbro

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

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

Diversification Opportunities for Shimano and Hasbro

0.37

Correlation Coefficient

Shimano  Hasbro

Weak diversification

The 3 months correlation between Shimano and Hasbro is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shimano Inc ADR and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc 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 Inc ADR are associated (or correlated) with Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Shimano i.e., Shimano and Hasbro go up and down completely randomly.

Pair Corralation between Shimano and Hasbro

Assuming the 90 days horizon Shimano Inc ADR is expected to under-perform the Hasbro. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shimano Inc ADR is 1.57 times less risky than Hasbro. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Hasbro Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,532  in Hasbro Inc on December 3, 2024 and sell it today you would lose (21.00) from holding Hasbro Inc or give up 0.32% of portfolio value over 90 days.

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

Shimano Inc ADR  vs.  Hasbro Inc

Shimano Inc ADR

Risk-Adjusted Performance

Very Weak

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

Hasbro Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hasbro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hasbro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Shimano and Hasbro

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

The idea behind Shimano Inc ADR and Hasbro Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.