Correlation Between THRACE PLASTICS and Canon

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

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

Diversification Opportunities for THRACE PLASTICS and Canon

-0.2

Correlation Coefficient

THRACE PLASTICS  Canon

Good diversification

The 3 months correlation between THRACE and Canon is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and Canon go up and down completely randomly.

Pair Corralation between THRACE PLASTICS and Canon

Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.84 times more return on investment than Canon. However, THRACE PLASTICS is 1.19 times less risky than Canon. It trades about 0.1 of its potential returns per unit of risk. Canon Inc is currently generating about -0.04 per unit of risk. If you would invest  387.00  in THRACE PLASTICS on December 27, 2024 and sell it today you would earn a total of  36.00  from holding THRACE PLASTICS or generate 9.3% return on investment over 90 days.

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

THRACE PLASTICS  vs.  Canon Inc

THRACE PLASTICS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, THRACE PLASTICS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Canon Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with THRACE PLASTICS and Canon

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

The idea behind THRACE PLASTICS and Canon 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.