Correlation Between Sankyo and La Franaise

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

By analyzing existing cross correlation between Sankyo Co and La Franaise des, you can compare the effects of market volatilities on Sankyo and La Franaise 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 Sankyo with a short position of La Franaise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sankyo and La Franaise.

Diversification Opportunities for Sankyo and La Franaise

-0.42

Correlation Coefficient

Sankyo  La Franaise

Very good diversification

The 3 months correlation between Sankyo and 1WE is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sankyo Co and La Franaise des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Franaise des and Sankyo 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 Sankyo Co are associated (or correlated) with La Franaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Franaise des has no effect on the direction of Sankyo i.e., Sankyo and La Franaise go up and down completely randomly.

Pair Corralation between Sankyo and La Franaise

Assuming the 90 days horizon Sankyo Co is expected to generate 1.17 times more return on investment than La Franaise. However, Sankyo is 1.17 times more volatile than La Franaise des. It trades about 0.05 of its potential returns per unit of risk. La Franaise des is currently generating about -0.08 per unit of risk. If you would invest  1,280  in Sankyo Co on October 10, 2024 and sell it today you would earn a total of  10.00  from holding Sankyo Co or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Sankyo Co  vs.  La Franaise des

Sankyo

Risk-Adjusted Performance

0 of 100

Very Weak

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

La Franaise des

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in La Franaise des are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, La Franaise is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sankyo and La Franaise

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

The idea behind Sankyo Co and La Franaise des 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.