Correlation Between Sony and Fertilizantes Heringer

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

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

Diversification Opportunities for Sony and Fertilizantes Heringer

-0.53

Correlation Coefficient

Sony  Fertilizantes Heringer

Excellent diversification

The 3 months correlation between Sony and Fertilizantes is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Fertilizantes Heringer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizantes Heringer and Sony 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 Sony Group are associated (or correlated) with Fertilizantes Heringer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizantes Heringer has no effect on the direction of Sony i.e., Sony and Fertilizantes Heringer go up and down completely randomly.

Pair Corralation between Sony and Fertilizantes Heringer

Assuming the 90 days trading horizon Sony Group is expected to generate 1.28 times more return on investment than Fertilizantes Heringer. However, Sony is 1.28 times more volatile than Fertilizantes Heringer SA. It trades about 0.1 of its potential returns per unit of risk. Fertilizantes Heringer SA is currently generating about -0.25 per unit of risk. If you would invest  10,657  in Sony Group on September 1, 2024 and sell it today you would earn a total of  1,409  from holding Sony Group or generate 13.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sony Group  vs.  Fertilizantes Heringer SA

Sony Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Sony sustained solid returns over the last few months and may actually be approaching a breakup point.

Fertilizantes Heringer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fertilizantes Heringer SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sony and Fertilizantes Heringer

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

The idea behind Sony Group and Fertilizantes Heringer SA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.