Correlation Between Motorcar Parts and Sekisui House

Can any of the company-specific risk be diversified away by investing in both Motorcar Parts and Sekisui House 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 Motorcar Parts and Sekisui House into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Motorcar Parts of and Sekisui House, you can compare the effects of market volatilities on Motorcar Parts and Sekisui House 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 Motorcar Parts with a short position of Sekisui House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motorcar Parts and Sekisui House.

Diversification Opportunities for Motorcar Parts and Sekisui House

-0.14

Correlation Coefficient

Motorcar Parts  Sekisui House

Good diversification

The 3 months correlation between Motorcar and Sekisui is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Motorcar Parts of and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House and Motorcar Parts 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 Motorcar Parts of are associated (or correlated) with Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of Motorcar Parts i.e., Motorcar Parts and Sekisui House go up and down completely randomly.

Pair Corralation between Motorcar Parts and Sekisui House

Assuming the 90 days horizon Motorcar Parts is expected to generate 3.45 times less return on investment than Sekisui House. In addition to that, Motorcar Parts is 2.61 times more volatile than Sekisui House. It trades about 0.01 of its total potential returns per unit of risk. Sekisui House is currently generating about 0.05 per unit of volatility. If you would invest  1,620  in Sekisui House on September 14, 2024 and sell it today you would earn a total of  640.00  from holding Sekisui House or generate 39.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Motorcar Parts of  vs.  Sekisui House

Motorcar Parts

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motorcar Parts of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Motorcar Parts reported solid returns over the last few months and may actually be approaching a breakup point.

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Sekisui House is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Motorcar Parts and Sekisui House

The main advantage of trading using opposite Motorcar Parts and Sekisui House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorcar Parts position performs unexpectedly, Sekisui House 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 Sekisui House will offset losses from the drop in Sekisui House's long position.

The idea behind Motorcar Parts of and Sekisui House 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.