Correlation Between OMRON Corp and Flex
Can any of the company-specific risk be diversified away by investing in both OMRON Corp and Flex 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 OMRON Corp and Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OMRON Corp ADR and Flex, you can compare the effects of market volatilities on OMRON Corp and Flex 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 OMRON Corp with a short position of Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMRON Corp and Flex.
Diversification Opportunities for OMRON Corp and Flex
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OMRON and Flex is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding OMRON Corp ADR and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and OMRON Corp 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 OMRON Corp ADR are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of OMRON Corp i.e., OMRON Corp and Flex go up and down completely randomly.
Pair Corralation between OMRON Corp and Flex
Assuming the 90 days horizon OMRON Corp is expected to generate 20.76 times less return on investment than Flex. But when comparing it to its historical volatility, OMRON Corp ADR is 1.51 times less risky than Flex. It trades about 0.0 of its potential returns per unit of risk. Flex is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,049 in Flex on November 5, 2024 and sell it today you would earn a total of 116.00 from holding Flex or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OMRON Corp ADR vs. Flex
Performance |
| Timeline |
| OMRON Corp ADR |
| Flex |
OMRON Corp and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OMRON Corp and Flex
The main advantage of trading using opposite OMRON Corp and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OMRON Corp position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.| OMRON Corp vs. Murata Manufacturing Co | OMRON Corp vs. LGL Group | OMRON Corp vs. Data IO | OMRON Corp vs. Bel Fuse A |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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