Correlation Between Textainer Group and Komatsu

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

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

Diversification Opportunities for Textainer Group and Komatsu

0.48

Correlation Coefficient

Textainer Group  Komatsu

Very weak diversification

The 3 months correlation between Textainer and Komatsu is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu and Textainer 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 Textainer Group Holdings are associated (or correlated) with Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Textainer Group i.e., Textainer Group and Komatsu go up and down completely randomly.

Pair Corralation between Textainer Group and Komatsu

Assuming the 90 days horizon Textainer Group is expected to generate 1.76 times less return on investment than Komatsu. In addition to that, Textainer Group is 2.74 times more volatile than Komatsu. It trades about 0.02 of its total potential returns per unit of risk. Komatsu is currently generating about 0.09 per unit of volatility. If you would invest  2,741  in Komatsu on December 30, 2024 and sell it today you would earn a total of  217.00  from holding Komatsu or generate 7.92% return on investment over 90 days.

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

Textainer Group Holdings  vs.  Komatsu

Textainer Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Textainer Group Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Textainer Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Komatsu

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Komatsu are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Komatsu may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Textainer Group and Komatsu

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

The idea behind Textainer Group Holdings and Komatsu 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.