Correlation Between Sony and Grupo KUO
Can any of the company-specific risk be diversified away by investing in both Sony and Grupo KUO 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 Grupo KUO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Grupo KUO SAB, you can compare the effects of market volatilities on Sony and Grupo KUO 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 Grupo KUO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Grupo KUO.
Diversification Opportunities for Sony and Grupo KUO
Modest diversification
The 3 months correlation between Sony and Grupo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO SAB 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 Grupo KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of Sony i.e., Sony and Grupo KUO go up and down completely randomly.
Pair Corralation between Sony and Grupo KUO
Assuming the 90 days trading horizon Sony Group is expected to generate 1.24 times more return on investment than Grupo KUO. However, Sony is 1.24 times more volatile than Grupo KUO SAB. It trades about 0.08 of its potential returns per unit of risk. Grupo KUO SAB is currently generating about 0.04 per unit of risk. If you would invest 30,240 in Sony Group on September 4, 2024 and sell it today you would earn a total of 11,260 from holding Sony Group or generate 37.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.9% |
| Values | Daily Returns |
Sony Group vs. Grupo KUO SAB
Performance |
| Timeline |
| Sony Group |
| Grupo KUO SAB |
Sony and Grupo KUO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Grupo KUO
The main advantage of trading using opposite Sony and Grupo KUO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, Grupo KUO 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 Grupo KUO will offset losses from the drop in Grupo KUO's long position.The idea behind Sony Group and Grupo KUO SAB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grupo KUO vs. Samsung Electronics Co | Grupo KUO vs. Sony Group | Grupo KUO vs. Taiwan Semiconductor Manufacturing | Grupo KUO vs. The Select Sector |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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