Correlation Between THK Co and Ushio

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

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

Diversification Opportunities for THK Co and Ushio

-0.03

Correlation Coefficient

THK Co  Ushio

Good diversification

The 3 months correlation between THK and Ushio is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding THK Co Ltd and Ushio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ushio Inc and THK Co 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 THK Co Ltd are associated (or correlated) with Ushio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ushio Inc has no effect on the direction of THK Co i.e., THK Co and Ushio go up and down completely randomly.

Pair Corralation between THK Co and Ushio

If you would invest  1,083  in THK Co Ltd on September 14, 2024 and sell it today you would earn a total of  102.00  from holding THK Co Ltd or generate 9.42% return on investment over 90 days.

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

THK Co Ltd  vs.  Ushio Inc

THK Co

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in THK Co Ltd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, THK Co showed solid returns over the last few months and may actually be approaching a breakup point.

Ushio Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ushio Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Ushio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with THK Co and Ushio

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

The idea behind THK Co Ltd and Ushio Inc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.