Correlation Between Isuzu Motors and Ajinomoto
Can any of the company-specific risk be diversified away by investing in both Isuzu Motors and Ajinomoto 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 Isuzu Motors and Ajinomoto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isuzu Motors and Ajinomoto Co ADR, you can compare the effects of market volatilities on Isuzu Motors and Ajinomoto 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 Isuzu Motors with a short position of Ajinomoto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isuzu Motors and Ajinomoto.
Diversification Opportunities for Isuzu Motors and Ajinomoto
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Isuzu and Ajinomoto is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Isuzu Motors and Ajinomoto Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajinomoto Co ADR and Isuzu Motors 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 Isuzu Motors are associated (or correlated) with Ajinomoto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajinomoto Co ADR has no effect on the direction of Isuzu Motors i.e., Isuzu Motors and Ajinomoto go up and down completely randomly.
Pair Corralation between Isuzu Motors and Ajinomoto
Assuming the 90 days horizon Isuzu Motors is expected to generate 1.04 times more return on investment than Ajinomoto. However, Isuzu Motors is 1.04 times more volatile than Ajinomoto Co ADR. It trades about 0.02 of its potential returns per unit of risk. Ajinomoto Co ADR is currently generating about 0.02 per unit of risk. If you would invest 1,226 in Isuzu Motors on August 31, 2024 and sell it today you would earn a total of 104.00 from holding Isuzu Motors or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Isuzu Motors vs. Ajinomoto Co ADR
Performance |
| Timeline |
| Isuzu Motors |
| Ajinomoto Co ADR |
Isuzu Motors and Ajinomoto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isuzu Motors and Ajinomoto
The main advantage of trading using opposite Isuzu Motors and Ajinomoto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isuzu Motors position performs unexpectedly, Ajinomoto 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 Ajinomoto will offset losses from the drop in Ajinomoto's long position.| Isuzu Motors vs. Suzuki Motor Corp | Isuzu Motors vs. Mitsubishi Estate Co | Isuzu Motors vs. Daiwa House Industry | Isuzu Motors vs. Mitsubishi Electric Corp |
| Ajinomoto vs. The A2 Milk | Ajinomoto vs. Altavoz Entertainment | Ajinomoto vs. Artisan Consumer Goods | Ajinomoto vs. General Mills |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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