Correlation Between Keyence and SMC Corp
Can any of the company-specific risk be diversified away by investing in both Keyence and SMC 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 Keyence and SMC Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyence and SMC Corp, you can compare the effects of market volatilities on Keyence and SMC 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 Keyence with a short position of SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyence and SMC Corp.
Diversification Opportunities for Keyence and SMC Corp
Weak diversification
The 3 months correlation between Keyence and SMC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and SMC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp and Keyence 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 Keyence are associated (or correlated) with SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp has no effect on the direction of Keyence i.e., Keyence and SMC Corp go up and down completely randomly.
Pair Corralation between Keyence and SMC Corp
Assuming the 90 days horizon Keyence is expected to under-perform the SMC Corp. In addition to that, Keyence is 1.25 times more volatile than SMC Corp. It trades about -0.05 of its total potential returns per unit of risk. SMC Corp is currently generating about 0.08 per unit of volatility. If you would invest 42,026 in SMC Corp on August 28, 2024 and sell it today you would earn a total of 1,082 from holding SMC Corp or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyence vs. SMC Corp
Performance |
| Timeline |
| Keyence |
| SMC Corp |
Keyence and SMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyence and SMC Corp
The main advantage of trading using opposite Keyence and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyence position performs unexpectedly, SMC 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 SMC Corp will offset losses from the drop in SMC Corp's long position.| Keyence vs. Garmin | Keyence vs. Keysight Technologies | Keyence vs. Fortive Corp | Keyence vs. Teledyne Technologies Incorporated |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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