Correlation Between Otsuka Information and China Metal
Can any of the company-specific risk be diversified away by investing in both Otsuka Information and China Metal 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 Otsuka Information and China Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otsuka Information Technology and China Metal Products, you can compare the effects of market volatilities on Otsuka Information and China Metal 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 Otsuka Information with a short position of China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otsuka Information and China Metal.
Diversification Opportunities for Otsuka Information and China Metal
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Otsuka and China is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Otsuka Information Technology and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products and Otsuka Information 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 Otsuka Information Technology are associated (or correlated) with China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of Otsuka Information i.e., Otsuka Information and China Metal go up and down completely randomly.
Pair Corralation between Otsuka Information and China Metal
Assuming the 90 days trading horizon Otsuka Information Technology is expected to generate 0.92 times more return on investment than China Metal. However, Otsuka Information Technology is 1.09 times less risky than China Metal. It trades about 0.06 of its potential returns per unit of risk. China Metal Products is currently generating about 0.0 per unit of risk. If you would invest 12,339 in Otsuka Information Technology on August 28, 2024 and sell it today you would earn a total of 4,261 from holding Otsuka Information Technology or generate 34.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otsuka Information Technology vs. China Metal Products
Performance |
| Timeline |
| Otsuka Information |
| China Metal Products |
Otsuka Information and China Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otsuka Information and China Metal
The main advantage of trading using opposite Otsuka Information and China Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otsuka Information position performs unexpectedly, China Metal 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 China Metal will offset losses from the drop in China Metal's long position.| Otsuka Information vs. Ruentex Development Co | Otsuka Information vs. Symtek Automation Asia | Otsuka Information vs. Leatec Fine Ceramics | Otsuka Information vs. CTCI Corp |
| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
Check out your portfolio center.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.
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