Correlation Between Ushio and THK Co

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

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

Diversification Opportunities for Ushio and THK Co

-0.03

Correlation Coefficient

Ushio  THK Co

Good diversification

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

Pair Corralation between Ushio and THK Co

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

Ushio Inc  vs.  THK Co Ltd

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.

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.

Pair Trading with Ushio and THK Co

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

The idea behind Ushio Inc and THK Co Ltd 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.