Correlation Between Resmed and HOYA
Can any of the company-specific risk be diversified away by investing in both Resmed and HOYA 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 Resmed and HOYA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resmed Inc DRC and HOYA Corporation, you can compare the effects of market volatilities on Resmed and HOYA 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 Resmed with a short position of HOYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resmed and HOYA.
Diversification Opportunities for Resmed and HOYA
Average diversification
The 3 months correlation between Resmed and HOYA is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Resmed Inc DRC and HOYA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA and Resmed 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 Resmed Inc DRC are associated (or correlated) with HOYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA has no effect on the direction of Resmed i.e., Resmed and HOYA go up and down completely randomly.
Pair Corralation between Resmed and HOYA
Assuming the 90 days trading horizon Resmed Inc DRC is expected to under-perform the HOYA. But the stock apears to be less risky and, when comparing its historical volatility, Resmed Inc DRC is 1.12 times less risky than HOYA. The stock trades about -0.23 of its potential returns per unit of risk. The HOYA Corporation is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 12,200 in HOYA Corporation on September 25, 2024 and sell it today you would lose (110.00) from holding HOYA Corporation or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resmed Inc DRC vs. HOYA Corp.
Performance |
| Timeline |
| Resmed Inc DRC |
| HOYA |
Resmed and HOYA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resmed and HOYA
The main advantage of trading using opposite Resmed and HOYA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resmed position performs unexpectedly, HOYA 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 HOYA will offset losses from the drop in HOYA's long position.| Resmed vs. Sixt Leasing SE | Resmed vs. ELMOS SEMICONDUCTOR | Resmed vs. AUSNUTRIA DAIRY | Resmed vs. United Rentals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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