Correlation Between Sony Group and PURE FOODS

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

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

Diversification Opportunities for Sony Group and PURE FOODS

0.29

Correlation Coefficient

Sony Group  PURE FOODS

Modest diversification

The 3 months correlation between Sony and PURE is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group Corp and PURE FOODS TASMANIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURE FOODS TASMANIA and Sony Group 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 Corp are associated (or correlated) with PURE FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURE FOODS TASMANIA has no effect on the direction of Sony Group i.e., Sony Group and PURE FOODS go up and down completely randomly.

Pair Corralation between Sony Group and PURE FOODS

Assuming the 90 days trading horizon Sony Group is expected to generate 39.38 times less return on investment than PURE FOODS. But when comparing it to its historical volatility, Sony Group Corp is 28.43 times less risky than PURE FOODS. It trades about 0.04 of its potential returns per unit of risk. PURE FOODS TASMANIA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9.40  in PURE FOODS TASMANIA on October 4, 2024 and sell it today you would lose (8.35) from holding PURE FOODS TASMANIA or give up 88.83% of portfolio value over 90 days.

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

Sony Group Corp  vs.  PURE FOODS TASMANIA

Sony Group Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sony Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

PURE FOODS TASMANIA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PURE FOODS TASMANIA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, PURE FOODS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sony Group and PURE FOODS

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

The idea behind Sony Group Corp and PURE FOODS TASMANIA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..