Correlation Between Transport International and Komatsu
Can any of the company-specific risk be diversified away by investing in both Transport International and Komatsu 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 Transport International and Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Komatsu, you can compare the effects of market volatilities on Transport International and Komatsu 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 Transport International with a short position of Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Komatsu.
Diversification Opportunities for Transport International and Komatsu
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transport and Komatsu is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu and Transport International 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 Transport International Holdings are associated (or correlated) with Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Transport International i.e., Transport International and Komatsu go up and down completely randomly.
Pair Corralation between Transport International and Komatsu
Assuming the 90 days horizon Transport International Holdings is expected to generate 2.78 times more return on investment than Komatsu. However, Transport International is 2.78 times more volatile than Komatsu. It trades about 0.07 of its potential returns per unit of risk. Komatsu is currently generating about 0.03 per unit of risk. If you would invest 28.00 in Transport International Holdings on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Transport International Holdings or generate 239.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Komatsu
Performance |
| Timeline |
| Transport International |
| Komatsu |
Transport International and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Komatsu
The main advantage of trading using opposite Transport International and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Transport International vs. CSX Corporation | Transport International vs. Westinghouse Air Brake | Transport International vs. Superior Plus Corp | Transport International vs. SIVERS SEMICONDUCTORS AB |
| Komatsu vs. Gold Road Resources | Komatsu vs. Transport International Holdings | Komatsu vs. Air Transport Services | Komatsu vs. Thai Beverage Public |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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