Correlation Between Shimano and Shimano

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

Diversification Opportunities for Shimano and Shimano

0.76

Correlation Coefficient

Shimano  Shimano

Poor diversification

The 3 months correlation between Shimano and Shimano is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shimano Inc ADR and Shimano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano has no effect on the direction of Shimano i.e., Shimano and Shimano go up and down completely randomly.

Pair Corralation between Shimano and Shimano

Assuming the 90 days horizon Shimano is expected to generate 2.66 times less return on investment than Shimano. But when comparing it to its historical volatility, Shimano Inc ADR is 1.3 times less risky than Shimano. It trades about 0.04 of its potential returns per unit of risk. Shimano is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,875  in Shimano on December 29, 2024 and sell it today you would earn a total of  1,436  from holding Shimano or generate 11.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.44%
Values	Daily Returns

Shimano Inc ADR  vs.  Shimano

Shimano Inc ADR

Risk-Adjusted Performance

Insignificant

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.

Shimano

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimano are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Shimano reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shimano and Shimano

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

The idea behind Shimano Inc ADR and Shimano 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.