Correlation Between Toyo Suisan and Orkla ASA

Can any of the company-specific risk be diversified away by investing in both Toyo Suisan and Orkla ASA 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 Orkla ASA 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 Orkla ASA ADR, you can compare the effects of market volatilities on Toyo Suisan and Orkla ASA 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 Orkla ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyo Suisan and Orkla ASA.

Diversification Opportunities for Toyo Suisan and Orkla ASA

-0.39

Correlation Coefficient

Toyo Suisan  Orkla ASA

Very good diversification

The 3 months correlation between Toyo and Orkla is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Toyo Suisan Kaisha and Orkla ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orkla ASA ADR 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 Orkla ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orkla ASA ADR has no effect on the direction of Toyo Suisan i.e., Toyo Suisan and Orkla ASA go up and down completely randomly.

Pair Corralation between Toyo Suisan and Orkla ASA

Assuming the 90 days horizon Toyo Suisan Kaisha is expected to generate 2.99 times more return on investment than Orkla ASA. However, Toyo Suisan is 2.99 times more volatile than Orkla ASA ADR. It trades about 0.03 of its potential returns per unit of risk. Orkla ASA ADR is currently generating about 0.05 per unit of risk. If you would invest  6,410  in Toyo Suisan Kaisha on September 3, 2024 and sell it today you would earn a total of  226.00  from holding Toyo Suisan Kaisha or generate 3.53% return on investment over 90 days.

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

Toyo Suisan Kaisha  vs.  Orkla ASA ADR

Toyo Suisan Kaisha

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Toyo Suisan Kaisha are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Toyo Suisan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Orkla ASA ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orkla ASA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Orkla ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Toyo Suisan and Orkla ASA

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

The idea behind Toyo Suisan Kaisha and Orkla ASA ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.