Correlation Between Sony and JSL SA
Can any of the company-specific risk be diversified away by investing in both Sony and JSL SA 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 JSL SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and JSL SA, you can compare the effects of market volatilities on Sony and JSL SA 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 JSL SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and JSL SA.
Diversification Opportunities for Sony and JSL SA
Very good diversification
The 3 months correlation between Sony and JSL is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and JSL SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL SA 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 JSL SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL SA has no effect on the direction of Sony i.e., Sony and JSL SA go up and down completely randomly.
Pair Corralation between Sony and JSL SA
Assuming the 90 days trading horizon Sony Group is expected to generate 0.56 times more return on investment than JSL SA. However, Sony Group is 1.79 times less risky than JSL SA. It trades about 0.25 of its potential returns per unit of risk. JSL SA is currently generating about -0.13 per unit of risk. If you would invest 10,220 in Sony Group on August 30, 2024 and sell it today you would earn a total of 1,495 from holding Sony Group or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Group vs. JSL SA
Performance |
| Timeline |
| Sony Group |
| JSL SA |
Sony and JSL SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and JSL SA
The main advantage of trading using opposite Sony and JSL SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, JSL SA 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 JSL SA will offset losses from the drop in JSL SA's long position.| Sony vs. Fidelity National Information | Sony vs. Unity Software | Sony vs. Spotify Technology SA | Sony vs. Zoom Video Communications |
| JSL SA vs. Cognizant Technology Solutions | JSL SA vs. CM Hospitalar SA | JSL SA vs. CVS Health | JSL SA vs. Automatic Data Processing |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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