Correlation Between Sony and Companhia
Can any of the company-specific risk be diversified away by investing in both Sony and Companhia 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 Sony and Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Companhia de Fiao, you can compare the effects of market volatilities on Sony and Companhia 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 Sony with a short position of Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Companhia.
Diversification Opportunities for Sony and Companhia
Excellent diversification
The 3 months correlation between Sony and Companhia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Companhia de Fiao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Fiao and Sony 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 Sony Group are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Fiao has no effect on the direction of Sony i.e., Sony and Companhia go up and down completely randomly.
Pair Corralation between Sony and Companhia
Assuming the 90 days trading horizon Sony Group is expected to generate 0.53 times more return on investment than Companhia. However, Sony Group is 1.87 times less risky than Companhia. It trades about 0.79 of its potential returns per unit of risk. Companhia de Fiao is currently generating about -0.22 per unit of risk. If you would invest 10,735 in Sony Group on September 13, 2024 and sell it today you would earn a total of 2,765 from holding Sony Group or generate 25.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Group vs. Companhia de Fiao
Performance |
| Timeline |
| Sony Group |
| Companhia de Fiao |
Sony and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Companhia
The main advantage of trading using opposite Sony and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| Sony vs. Paycom Software | Sony vs. Charter Communications | Sony vs. Take Two Interactive Software | Sony vs. Metalurgica Gerdau SA |
| Companhia vs. Companhia de Fiacao | Companhia vs. Companhia de Tecidos | Companhia vs. Companhia Tecidos Santanense | Companhia vs. Companhia Tecidos Santanense |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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