Correlation Between Sanyo Chemical and COMBA TELECOM

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

By analyzing existing cross correlation between Sanyo Chemical Industries and COMBA TELECOM SYST, you can compare the effects of market volatilities on Sanyo Chemical and COMBA TELECOM 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 Sanyo Chemical with a short position of COMBA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and COMBA TELECOM.

Diversification Opportunities for Sanyo Chemical and COMBA TELECOM

0.4

Correlation Coefficient

Sanyo Chemical  COMBA TELECOM

Very weak diversification

The 3 months correlation between Sanyo and COMBA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST and Sanyo Chemical 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 Sanyo Chemical Industries are associated (or correlated) with COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and COMBA TELECOM go up and down completely randomly.

Pair Corralation between Sanyo Chemical and COMBA TELECOM

Assuming the 90 days horizon Sanyo Chemical Industries is expected to under-perform the COMBA TELECOM. But the stock apears to be less risky and, when comparing its historical volatility, Sanyo Chemical Industries is 3.88 times less risky than COMBA TELECOM. The stock trades about -0.17 of its potential returns per unit of risk. The COMBA TELECOM SYST is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  12.00  in COMBA TELECOM SYST on October 4, 2024 and sell it today you would earn a total of  3.00  from holding COMBA TELECOM SYST or generate 25.0% return on investment over 90 days.

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

Sanyo Chemical Industries  vs.  COMBA TELECOM SYST

Sanyo Chemical Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

COMBA TELECOM SYST

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, COMBA TELECOM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sanyo Chemical and COMBA TELECOM

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

The idea behind Sanyo Chemical Industries and COMBA TELECOM SYST 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.