Correlation Between MYFAIR GOLD and SHIMANO INC

Can any of the company-specific risk be diversified away by investing in both MYFAIR GOLD and SHIMANO INC 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 MYFAIR GOLD and SHIMANO INC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MYFAIR GOLD P and SHIMANO INC UNSPADR10, you can compare the effects of market volatilities on MYFAIR GOLD and SHIMANO INC 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 MYFAIR GOLD with a short position of SHIMANO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYFAIR GOLD and SHIMANO INC.

Diversification Opportunities for MYFAIR GOLD and SHIMANO INC

0.3

Correlation Coefficient

MYFAIR GOLD  SHIMANO INC

Weak diversification

The 3 months correlation between MYFAIR and SHIMANO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MYFAIR GOLD P and SHIMANO INC UNSPADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIMANO INC UNSPADR10 and MYFAIR GOLD 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 MYFAIR GOLD P are associated (or correlated) with SHIMANO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIMANO INC UNSPADR10 has no effect on the direction of MYFAIR GOLD i.e., MYFAIR GOLD and SHIMANO INC go up and down completely randomly.

Pair Corralation between MYFAIR GOLD and SHIMANO INC

Assuming the 90 days horizon MYFAIR GOLD P is expected to under-perform the SHIMANO INC. In addition to that, MYFAIR GOLD is 1.29 times more volatile than SHIMANO INC UNSPADR10. It trades about -0.07 of its total potential returns per unit of risk. SHIMANO INC UNSPADR10 is currently generating about -0.05 per unit of volatility. If you would invest  1,370  in SHIMANO INC UNSPADR10 on September 26, 2024 and sell it today you would lose (110.00) from holding SHIMANO INC UNSPADR10 or give up 8.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MYFAIR GOLD P  vs.  SHIMANO INC UNSPADR10

MYFAIR GOLD P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MYFAIR GOLD P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SHIMANO INC UNSPADR10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIMANO INC UNSPADR10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MYFAIR GOLD and SHIMANO INC

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

The idea behind MYFAIR GOLD P and SHIMANO INC UNSPADR10 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.