Correlation Between TRADEGATE and Canon Marketing

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

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

Diversification Opportunities for TRADEGATE and Canon Marketing

0.39

Correlation Coefficient

TRADEGATE  Canon Marketing

Weak diversification

The 3 months correlation between TRADEGATE and Canon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Canon Marketing Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Marketing Japan and TRADEGATE 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 TRADEGATE are associated (or correlated) with Canon Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Marketing Japan has no effect on the direction of TRADEGATE i.e., TRADEGATE and Canon Marketing go up and down completely randomly.

Pair Corralation between TRADEGATE and Canon Marketing

Assuming the 90 days trading horizon TRADEGATE is expected to generate 16.18 times less return on investment than Canon Marketing. But when comparing it to its historical volatility, TRADEGATE is 5.52 times less risky than Canon Marketing. It trades about 0.04 of its potential returns per unit of risk. Canon Marketing Japan is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,840  in Canon Marketing Japan on September 27, 2024 and sell it today you would earn a total of  260.00  from holding Canon Marketing Japan or generate 9.15% return on investment over 90 days.

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

TRADEGATE  vs.  Canon Marketing Japan

TRADEGATE

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRADEGATE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Canon Marketing Japan

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canon Marketing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TRADEGATE and Canon Marketing

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

The idea behind TRADEGATE and Canon Marketing Japan 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.