Correlation Between Sony Group and Herms International
Can any of the company-specific risk be diversified away by investing in both Sony Group and Herms International 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 Group and Herms International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group Corp and Herms International Socit, you can compare the effects of market volatilities on Sony Group and Herms International 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 Group with a short position of Herms International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Group and Herms International.
Diversification Opportunities for Sony Group and Herms International
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sony and Herms is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group Corp and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit and Sony Group 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 Corp are associated (or correlated) with Herms International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of Sony Group i.e., Sony Group and Herms International go up and down completely randomly.
Pair Corralation between Sony Group and Herms International
Assuming the 90 days trading horizon Sony Group Corp is expected to generate 4.52 times more return on investment than Herms International. However, Sony Group is 4.52 times more volatile than Herms International Socit. It trades about 0.07 of its potential returns per unit of risk. Herms International Socit is currently generating about 0.06 per unit of risk. If you would invest 318.00 in Sony Group Corp on September 26, 2024 and sell it today you would earn a total of 1,710 from holding Sony Group Corp or generate 537.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Group Corp vs. Herms International Socit
Performance |
| Timeline |
| Sony Group Corp |
| Herms International Socit |
Sony Group and Herms International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony Group and Herms International
The main advantage of trading using opposite Sony Group and Herms International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Group position performs unexpectedly, Herms International 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 Herms International will offset losses from the drop in Herms International's long position.| Sony Group vs. Apple Inc | Sony Group vs. Samsung Electronics Co | Sony Group vs. Samsung Electronics Co | Sony Group vs. Sony Group |
| Herms International vs. LVMH Mot Hennessy | Herms International vs. CHRISTIAN DIOR ADR14EO2 | Herms International vs. Christian Dior SE | Herms International vs. The Swatch Group |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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