Correlation Between Shimano and Nikon

Can any of the company-specific risk be diversified away by investing in both Shimano and Nikon 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 Nikon 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 Nikon, you can compare the effects of market volatilities on Shimano and Nikon 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 Nikon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shimano and Nikon.

Diversification Opportunities for Shimano and Nikon

0.0

Correlation Coefficient

Shimano  Nikon

Pay attention - limited upside

The 3 months correlation between Shimano and Nikon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shimano Inc ADR and Nikon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikon 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 Nikon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikon has no effect on the direction of Shimano i.e., Shimano and Nikon go up and down completely randomly.

Pair Corralation between Shimano and Nikon

If you would invest  1,360  in Shimano Inc ADR on December 28, 2024 and sell it today you would earn a total of  54.00  from holding Shimano Inc ADR or generate 3.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shimano Inc ADR  vs.  Nikon

Shimano Inc ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shimano Inc ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Nikon

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shimano and Nikon

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

The idea behind Shimano Inc ADR and Nikon 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 Stocks Directory module to find actively traded stocks across global markets.