Correlation Between Asahi Kaisei and Toray Industries
Can any of the company-specific risk be diversified away by investing in both Asahi Kaisei and Toray Industries 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 Asahi Kaisei and Toray Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asahi Kaisei Corp and Toray Industries ADR, you can compare the effects of market volatilities on Asahi Kaisei and Toray Industries 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 Asahi Kaisei with a short position of Toray Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Kaisei and Toray Industries.
Diversification Opportunities for Asahi Kaisei and Toray Industries
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asahi and Toray is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Kaisei Corp and Toray Industries ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toray Industries ADR and Asahi Kaisei 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 Asahi Kaisei Corp are associated (or correlated) with Toray Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toray Industries ADR has no effect on the direction of Asahi Kaisei i.e., Asahi Kaisei and Toray Industries go up and down completely randomly.
Pair Corralation between Asahi Kaisei and Toray Industries
Assuming the 90 days horizon Asahi Kaisei Corp is expected to under-perform the Toray Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asahi Kaisei Corp is 2.91 times less risky than Toray Industries. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Toray Industries ADR is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,074 in Toray Industries ADR on September 2, 2024 and sell it today you would earn a total of 198.00 from holding Toray Industries ADR or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asahi Kaisei Corp vs. Toray Industries ADR
Performance |
| Timeline |
| Asahi Kaisei Corp |
| Toray Industries ADR |
Asahi Kaisei and Toray Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asahi Kaisei and Toray Industries
The main advantage of trading using opposite Asahi Kaisei and Toray Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahi Kaisei position performs unexpectedly, Toray Industries 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 Toray Industries will offset losses from the drop in Toray Industries' long position.| Asahi Kaisei vs. BASF SE NA | Asahi Kaisei vs. Braskem SA Class | Asahi Kaisei vs. Lsb Industries | Asahi Kaisei vs. Dow Inc |
| Toray Industries vs. Unifi Inc | Toray Industries vs. Albany International | Toray Industries vs. Sumitomo Electric Industries | Toray Industries vs. Sekisui House |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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