Correlation Between Obayashi and Kajima Corp
Can any of the company-specific risk be diversified away by investing in both Obayashi and Kajima 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 Obayashi and Kajima Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Obayashi and Kajima Corp ADR, you can compare the effects of market volatilities on Obayashi and Kajima 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 Obayashi with a short position of Kajima Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obayashi and Kajima Corp.
Diversification Opportunities for Obayashi and Kajima Corp
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Obayashi and Kajima is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Obayashi and Kajima Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kajima Corp ADR and Obayashi 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 Obayashi are associated (or correlated) with Kajima Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kajima Corp ADR has no effect on the direction of Obayashi i.e., Obayashi and Kajima Corp go up and down completely randomly.
Pair Corralation between Obayashi and Kajima Corp
Assuming the 90 days horizon Obayashi is expected to generate 0.7 times more return on investment than Kajima Corp. However, Obayashi is 1.43 times less risky than Kajima Corp. It trades about 0.08 of its potential returns per unit of risk. Kajima Corp ADR is currently generating about 0.05 per unit of risk. If you would invest 732.00 in Obayashi on August 28, 2024 and sell it today you would earn a total of 577.00 from holding Obayashi or generate 78.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Obayashi vs. Kajima Corp ADR
Performance |
| Timeline |
| Obayashi |
| Kajima Corp ADR |
Obayashi and Kajima Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Obayashi and Kajima Corp
The main advantage of trading using opposite Obayashi and Kajima Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Obayashi position performs unexpectedly, Kajima 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 Kajima Corp will offset losses from the drop in Kajima Corp's long position.| Obayashi vs. Copa Holdings SA | Obayashi vs. United Airlines Holdings | Obayashi vs. Delta Air Lines | Obayashi vs. SkyWest |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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