Correlation Between Ushio and Amada

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Can any of the company-specific risk be diversified away by investing in both Ushio and Amada 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 Ushio and Amada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ushio Inc and Amada Co, you can compare the effects of market volatilities on Ushio and Amada 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 Ushio with a short position of Amada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ushio and Amada.

Diversification Opportunities for Ushio and Amada

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Ushio and Amada is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ushio Inc and Amada Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amada and Ushio 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 Ushio Inc are associated (or correlated) with Amada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amada has no effect on the direction of Ushio i.e., Ushio and Amada go up and down completely randomly.

Pair Corralation between Ushio and Amada

Assuming the 90 days horizon Ushio Inc is expected to under-perform the Amada. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ushio Inc is 2.74 times less risky than Amada. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Amada Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Amada Co on October 20, 2024 and sell it today you would earn a total of  19.00  from holding Amada Co or generate 2.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy90.48%
ValuesDaily Returns

Ushio Inc  vs.  Amada Co

 Performance 
       Timeline  
Ushio Inc 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Ushio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Amada 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Amada Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ushio and Amada Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ushio and Amada

The main advantage of trading using opposite Ushio and Amada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ushio position performs unexpectedly, Amada 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 Amada will offset losses from the drop in Amada's long position.
The idea behind Ushio Inc and Amada Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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