Correlation Between Ushio and NGK Insulators
Can any of the company-specific risk be diversified away by investing in both Ushio and NGK Insulators 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 Ushio and NGK Insulators into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ushio Inc and NGK Insulators, you can compare the effects of market volatilities on Ushio and NGK Insulators 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 Ushio with a short position of NGK Insulators. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ushio and NGK Insulators.
Diversification Opportunities for Ushio and NGK Insulators
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ushio and NGK is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ushio Inc and NGK Insulators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGK Insulators and Ushio 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 Ushio Inc are associated (or correlated) with NGK Insulators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGK Insulators has no effect on the direction of Ushio i.e., Ushio and NGK Insulators go up and down completely randomly.
Pair Corralation between Ushio and NGK Insulators
Assuming the 90 days horizon Ushio Inc is expected to generate 0.91 times more return on investment than NGK Insulators. However, Ushio Inc is 1.1 times less risky than NGK Insulators. It trades about 0.05 of its potential returns per unit of risk. NGK Insulators is currently generating about 0.04 per unit of risk. If you would invest 1,223 in Ushio Inc on September 12, 2024 and sell it today you would earn a total of 177.00 from holding Ushio Inc or generate 14.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.53% |
| Values | Daily Returns |
Ushio Inc vs. NGK Insulators
Performance |
| Timeline |
| Ushio Inc |
| NGK Insulators |
Ushio and NGK Insulators Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ushio and NGK Insulators
The main advantage of trading using opposite Ushio and NGK Insulators positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ushio position performs unexpectedly, NGK Insulators 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 NGK Insulators will offset losses from the drop in NGK Insulators' long position.| Ushio vs. Xinjiang Goldwind Science | Ushio vs. American Superconductor | Ushio vs. Cummins | Ushio vs. Aquagold International |
| NGK Insulators vs. NI Holdings | NGK Insulators vs. Pekin Life Insurance | NGK Insulators vs. Palomar Holdings | NGK Insulators vs. Siriuspoint |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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