Correlation Between Olympus and Panasonic Corp
Can any of the company-specific risk be diversified away by investing in both Olympus and Panasonic 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 Olympus and Panasonic Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympus and Panasonic Corp, you can compare the effects of market volatilities on Olympus and Panasonic 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 Olympus with a short position of Panasonic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympus and Panasonic Corp.
Diversification Opportunities for Olympus and Panasonic Corp
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Olympus and Panasonic is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Olympus and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic Corp and Olympus 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 Olympus are associated (or correlated) with Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of Olympus i.e., Olympus and Panasonic Corp go up and down completely randomly.
Pair Corralation between Olympus and Panasonic Corp
Assuming the 90 days trading horizon Olympus is expected to generate 0.81 times more return on investment than Panasonic Corp. However, Olympus is 1.24 times less risky than Panasonic Corp. It trades about 0.04 of its potential returns per unit of risk. Panasonic Corp is currently generating about 0.01 per unit of risk. If you would invest 1,323 in Olympus on September 14, 2024 and sell it today you would earn a total of 190.00 from holding Olympus or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Olympus vs. Panasonic Corp
Performance |
| Timeline |
| Olympus |
| Panasonic Corp |
Olympus and Panasonic Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympus and Panasonic Corp
The main advantage of trading using opposite Olympus and Panasonic Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympus position performs unexpectedly, Panasonic 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 Panasonic Corp will offset losses from the drop in Panasonic Corp's long position.| Olympus vs. Westinghouse Air Brake | Olympus vs. Cars Inc | Olympus vs. Wizz Air Holdings | Olympus vs. Ryanair Holdings plc |
| Panasonic Corp vs. Perdoceo Education | Panasonic Corp vs. Corporate Travel Management | Panasonic Corp vs. Lion One Metals | Panasonic Corp vs. Waste Management |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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