Correlation Between Toyo Suisan and BG Foods

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

By analyzing existing cross correlation between Toyo Suisan Kaisha and BG Foods, you can compare the effects of market volatilities on Toyo Suisan and BG 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 Toyo Suisan with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyo Suisan and BG Foods.

Diversification Opportunities for Toyo Suisan and BG Foods

-0.6

Correlation Coefficient

Toyo Suisan  BG Foods

Excellent diversification

The 3 months correlation between Toyo and BGS is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Toyo Suisan Kaisha and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Toyo Suisan 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 Toyo Suisan Kaisha are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Toyo Suisan i.e., Toyo Suisan and BG Foods go up and down completely randomly.

Pair Corralation between Toyo Suisan and BG Foods

If you would invest  4,222  in Toyo Suisan Kaisha on September 11, 2024 and sell it today you would earn a total of  0.00  from holding Toyo Suisan Kaisha or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Toyo Suisan Kaisha  vs.  BG Foods

Toyo Suisan Kaisha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toyo Suisan Kaisha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Toyo Suisan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BG Foods is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Toyo Suisan and BG Foods

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

The idea behind Toyo Suisan Kaisha and BG Foods 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.