Correlation Between America Great and Otsuka
Can any of the company-specific risk be diversified away by investing in both America Great and Otsuka 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 America Great and Otsuka into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between America Great Health and Otsuka, you can compare the effects of market volatilities on America Great and Otsuka 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 America Great with a short position of Otsuka. Check out your portfolio center. Please also check ongoing floating volatility patterns of America Great and Otsuka.
Diversification Opportunities for America Great and Otsuka
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between America and Otsuka is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding America Great Health and Otsuka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka and America Great 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 America Great Health are associated (or correlated) with Otsuka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka has no effect on the direction of America Great i.e., America Great and Otsuka go up and down completely randomly.
Pair Corralation between America Great and Otsuka
Given the investment horizon of 90 days America Great Health is expected to generate 1.84 times more return on investment than Otsuka. However, America Great is 1.84 times more volatile than Otsuka. It trades about 0.08 of its potential returns per unit of risk. Otsuka is currently generating about -0.1 per unit of risk. If you would invest 0.06 in America Great Health on September 12, 2024 and sell it today you would lose (0.05) from holding America Great Health or give up 83.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 29.49% |
| Values | Daily Returns |
America Great Health vs. Otsuka
Performance |
| Timeline |
| America Great Health |
| Otsuka |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
America Great and Otsuka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with America Great and Otsuka
The main advantage of trading using opposite America Great and Otsuka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if America Great position performs unexpectedly, Otsuka 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 Otsuka will offset losses from the drop in Otsuka's long position.The idea behind America Great Health and Otsuka 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |