Correlation Between CARSALESCOM and Keyence
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and Keyence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Keyence, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and Keyence.
Diversification Opportunities for CARSALESCOM and Keyence
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CARSALESCOM and Keyence is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and Keyence go up and down completely randomly.
Pair Corralation between CARSALESCOM and Keyence
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 4.4 times less return on investment than Keyence. But when comparing it to its historical volatility, CARSALESCOM is 2.92 times less risky than Keyence. It trades about 0.04 of its potential returns per unit of risk. Keyence is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Keyence
Performance |
| Timeline |
| CARSALESCOM |
| Keyence |
CARSALESCOM and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and Keyence
The main advantage of trading using opposite CARSALESCOM and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.| CARSALESCOM vs. SHIP HEALTHCARE HLDGINC | CARSALESCOM vs. CVS Health | CARSALESCOM vs. Citic Telecom International | CARSALESCOM vs. COMBA TELECOM SYST |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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