Correlation Between Disney and Asahi Group

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

By analyzing existing cross correlation between Walt Disney and Asahi Group Holdings, you can compare the effects of market volatilities on Disney and Asahi Group 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 Disney with a short position of Asahi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Asahi Group.

Diversification Opportunities for Disney and Asahi Group

-0.43

Correlation Coefficient

Disney  Asahi Group

Very good diversification

The 3 months correlation between Disney and Asahi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings and Disney 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 Walt Disney are associated (or correlated) with Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Disney i.e., Disney and Asahi Group go up and down completely randomly.

Pair Corralation between Disney and Asahi Group

Considering the 90-day investment horizon Walt Disney is expected to generate 0.37 times more return on investment than Asahi Group. However, Walt Disney is 2.7 times less risky than Asahi Group. It trades about 0.2 of its potential returns per unit of risk. Asahi Group Holdings is currently generating about -0.04 per unit of risk. If you would invest  9,351  in Walt Disney on September 25, 2024 and sell it today you would earn a total of  1,789  from holding Walt Disney or generate 19.13% return on investment over 90 days.

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

Walt Disney  vs.  Asahi Group Holdings

Walt Disney

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Asahi Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with Disney and Asahi Group

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

The idea behind Walt Disney and Asahi Group Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.