Correlation Between Dear Cashmere and IHI Corp
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and IHI Corp 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 Dear Cashmere and IHI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and IHI Corp ADR, you can compare the effects of market volatilities on Dear Cashmere and IHI Corp 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 Dear Cashmere with a short position of IHI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and IHI Corp.
Diversification Opportunities for Dear Cashmere and IHI Corp
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dear and IHI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and IHI Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHI Corp ADR and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with IHI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHI Corp ADR has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and IHI Corp go up and down completely randomly.
Pair Corralation between Dear Cashmere and IHI Corp
Given the investment horizon of 90 days Dear Cashmere Holding is expected to generate 3.77 times more return on investment than IHI Corp. However, Dear Cashmere is 3.77 times more volatile than IHI Corp ADR. It trades about 0.08 of its potential returns per unit of risk. IHI Corp ADR is currently generating about -0.13 per unit of risk. If you would invest 16.00 in Dear Cashmere Holding on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Dear Cashmere Holding or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dear Cashmere Holding vs. IHI Corp ADR
Performance |
| Timeline |
| Dear Cashmere Holding |
| IHI Corp ADR |
Dear Cashmere and IHI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dear Cashmere and IHI Corp
The main advantage of trading using opposite Dear Cashmere and IHI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere position performs unexpectedly, IHI Corp 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 IHI Corp will offset losses from the drop in IHI Corp's long position.| Dear Cashmere vs. One World Universe | Dear Cashmere vs. All American Pet | Dear Cashmere vs. Ilustrato Pictures | Dear Cashmere vs. Quality Industrial Corp |
| IHI Corp vs. Xinjiang Goldwind Science | IHI Corp vs. American Superconductor | IHI Corp vs. Cummins | IHI Corp vs. Aquagold International |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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