Correlation Between Amphenol and OMRON Corp

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

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

Diversification Opportunities for Amphenol and OMRON Corp

-0.72

Correlation Coefficient

Amphenol  OMRON Corp

Pay attention - limited upside

The 3 months correlation between Amphenol and OMRON is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol and OMRON Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMRON Corp ADR and Amphenol 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 Amphenol are associated (or correlated) with OMRON Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMRON Corp ADR has no effect on the direction of Amphenol i.e., Amphenol and OMRON Corp go up and down completely randomly.

Pair Corralation between Amphenol and OMRON Corp

Considering the 90-day investment horizon Amphenol is expected to generate 1.07 times more return on investment than OMRON Corp. However, Amphenol is 1.07 times more volatile than OMRON Corp ADR. It trades about 0.08 of its potential returns per unit of risk. OMRON Corp ADR is currently generating about -0.23 per unit of risk. If you would invest  6,727  in Amphenol on August 30, 2024 and sell it today you would earn a total of  547.00  from holding Amphenol or generate 8.13% return on investment over 90 days.

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

Amphenol  vs.  OMRON Corp ADR

Amphenol

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Amphenol may actually be approaching a critical reversion point that can send shares even higher in December 2024.

OMRON Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OMRON Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Amphenol and OMRON Corp

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

The idea behind Amphenol and OMRON Corp ADR 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 CEOs Directory module to screen CEOs from public companies around the world.