Correlation Between THORNEY TECHS and Keyence
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and Keyence 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 THORNEY TECHS and Keyence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and Keyence, you can compare the effects of market volatilities on THORNEY TECHS and Keyence 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 THORNEY TECHS with a short position of Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and Keyence.
Diversification Opportunities for THORNEY TECHS and Keyence
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THORNEY and Keyence is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and Keyence go up and down completely randomly.
Pair Corralation between THORNEY TECHS and Keyence
Assuming the 90 days horizon THORNEY TECHS is expected to generate 4.92 times less return on investment than Keyence. In addition to that, THORNEY TECHS is 1.16 times more volatile than Keyence. It trades about 0.01 of its total potential returns per unit of risk. Keyence is currently generating about 0.06 per unit of volatility. If you would invest 27,646 in Keyence on October 25, 2024 and sell it today you would earn a total of 13,864 from holding Keyence or generate 50.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. Keyence
Performance |
| Timeline |
| THORNEY TECHS LTD |
| Keyence |
THORNEY TECHS and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and Keyence
The main advantage of trading using opposite THORNEY TECHS and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.| THORNEY TECHS vs. Soken Chemical Engineering | THORNEY TECHS vs. Scottish Mortgage Investment | THORNEY TECHS vs. Shin Etsu Chemical Co | THORNEY TECHS vs. TIANDE CHEMICAL |
| Keyence vs. Insteel Industries | Keyence vs. BlueScope Steel Limited | Keyence vs. Boyd Gaming | Keyence vs. Nippon Steel |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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