Correlation Between Komatsu and Kubota
Can any of the company-specific risk be diversified away by investing in both Komatsu and Kubota 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 Komatsu and Kubota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Komatsu and Kubota, you can compare the effects of market volatilities on Komatsu and Kubota 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 Komatsu with a short position of Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Komatsu and Kubota.
Diversification Opportunities for Komatsu and Kubota
Good diversification
The 3 months correlation between Komatsu and Kubota is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Komatsu and Kubota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kubota and Komatsu 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 Komatsu are associated (or correlated) with Kubota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kubota has no effect on the direction of Komatsu i.e., Komatsu and Kubota go up and down completely randomly.
Pair Corralation between Komatsu and Kubota
Assuming the 90 days trading horizon Komatsu is expected to generate 1.37 times more return on investment than Kubota. However, Komatsu is 1.37 times more volatile than Kubota. It trades about 0.11 of its potential returns per unit of risk. Kubota is currently generating about 0.0 per unit of risk. If you would invest 2,410 in Komatsu on September 3, 2024 and sell it today you would earn a total of 121.00 from holding Komatsu or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Komatsu vs. Kubota
Performance |
| Timeline |
| Komatsu |
| Kubota |
Komatsu and Kubota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Komatsu and Kubota
The main advantage of trading using opposite Komatsu and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Komatsu position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota's long position.| Komatsu vs. Transportadora de Gas | Komatsu vs. Air Transport Services | Komatsu vs. RYU Apparel | Komatsu vs. NTG Nordic Transport |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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