Correlation Between DENSO CORP and Cooper-Standard Holdings
Can any of the company-specific risk be diversified away by investing in both DENSO CORP and Cooper-Standard Holdings 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 DENSO CORP and Cooper-Standard Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DENSO P ADR and Cooper Standard Holdings, you can compare the effects of market volatilities on DENSO CORP and Cooper-Standard Holdings 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 DENSO CORP with a short position of Cooper-Standard Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DENSO CORP and Cooper-Standard Holdings.
Diversification Opportunities for DENSO CORP and Cooper-Standard Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DENSO and Cooper-Standard is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding DENSO P ADR and Cooper Standard Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Standard Holdings and DENSO CORP 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 DENSO P ADR are associated (or correlated) with Cooper-Standard Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Standard Holdings has no effect on the direction of DENSO CORP i.e., DENSO CORP and Cooper-Standard Holdings go up and down completely randomly.
Pair Corralation between DENSO CORP and Cooper-Standard Holdings
Assuming the 90 days trading horizon DENSO CORP is expected to generate 7.5 times less return on investment than Cooper-Standard Holdings. But when comparing it to its historical volatility, DENSO P ADR is 2.69 times less risky than Cooper-Standard Holdings. It trades about 0.06 of its potential returns per unit of risk. Cooper Standard Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,140 in Cooper Standard Holdings on September 2, 2024 and sell it today you would earn a total of 220.00 from holding Cooper Standard Holdings or generate 19.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DENSO P ADR vs. Cooper Standard Holdings
Performance |
| Timeline |
| DENSO P ADR |
| Cooper Standard Holdings |
DENSO CORP and Cooper-Standard Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DENSO CORP and Cooper-Standard Holdings
The main advantage of trading using opposite DENSO CORP and Cooper-Standard Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DENSO CORP position performs unexpectedly, Cooper-Standard Holdings 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 Cooper-Standard Holdings will offset losses from the drop in Cooper-Standard Holdings' long position.| DENSO CORP vs. PT Astra International | DENSO CORP vs. Superior Plus Corp | DENSO CORP vs. NMI Holdings | DENSO CORP vs. Origin Agritech |
| Cooper-Standard Holdings vs. Flutter Entertainment PLC | Cooper-Standard Holdings vs. FANDIFI TECHNOLOGY P | Cooper-Standard Holdings vs. Vishay Intertechnology | Cooper-Standard Holdings vs. XLMedia PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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