Correlation Between Sony and Kyocera

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

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

Diversification Opportunities for Sony and Kyocera

0.78

Correlation Coefficient

Sony  Kyocera

Poor diversification

The 3 months correlation between Sony and Kyocera is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Kyocera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyocera 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 Kyocera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyocera has no effect on the direction of Sony i.e., Sony and Kyocera go up and down completely randomly.

Pair Corralation between Sony and Kyocera

Assuming the 90 days trading horizon Sony is expected to generate 1.32 times less return on investment than Kyocera. In addition to that, Sony is 1.61 times more volatile than Kyocera. It trades about 0.07 of its total potential returns per unit of risk. Kyocera is currently generating about 0.16 per unit of volatility. If you would invest  906.00  in Kyocera on December 20, 2024 and sell it today you would earn a total of  162.00  from holding Kyocera or generate 17.88% return on investment over 90 days.

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

Sony Group  vs.  Kyocera

Sony Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sony reported solid returns over the last few months and may actually be approaching a breakup point.

Kyocera

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kyocera are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kyocera reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sony and Kyocera

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

The idea behind Sony Group and Kyocera 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.