Correlation Between Sony and Inepar SA

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

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

Diversification Opportunities for Sony and Inepar SA

0.4

Correlation Coefficient

Sony  Inepar SA

Very weak diversification

The 3 months correlation between Sony and Inepar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria and Sony 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 Sony Group are associated (or correlated) with Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Sony i.e., Sony and Inepar SA go up and down completely randomly.

Pair Corralation between Sony and Inepar SA

Assuming the 90 days trading horizon Sony is expected to generate 1.02 times less return on investment than Inepar SA. But when comparing it to its historical volatility, Sony Group is 2.85 times less risky than Inepar SA. It trades about 0.19 of its potential returns per unit of risk. Inepar SA Indstria is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Inepar SA Indstria on December 1, 2024 and sell it today you would earn a total of  18.00  from holding Inepar SA Indstria or generate 14.06% return on investment over 90 days.

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

Sony Group  vs.  Inepar SA Indstria

Sony Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Sony sustained solid returns over the last few months and may actually be approaching a breakup point.

Inepar SA Indstria

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inepar SA Indstria are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inepar SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sony and Inepar SA

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

The idea behind Sony Group and Inepar SA Indstria 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.