Correlation Between LeapFrog Enterprises and Sony

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Can any of the company-specific risk be diversified away by investing in both LeapFrog Enterprises and Sony 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 LeapFrog Enterprises and Sony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LeapFrog Enterprises and Sony Group, you can compare the effects of market volatilities on LeapFrog Enterprises and Sony 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 LeapFrog Enterprises with a short position of Sony. Check out your portfolio center. Please also check ongoing floating volatility patterns of LeapFrog Enterprises and Sony.

Diversification Opportunities for LeapFrog Enterprises and Sony

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between LeapFrog and Sony is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LeapFrog Enterprises and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group and LeapFrog Enterprises 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 LeapFrog Enterprises are associated (or correlated) with Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of LeapFrog Enterprises i.e., LeapFrog Enterprises and Sony go up and down completely randomly.

Pair Corralation between LeapFrog Enterprises and Sony

If you would invest (100.00) in Sony Group on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Sony Group or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LeapFrog Enterprises  vs.  Sony Group

 Performance 
       Timeline  
LeapFrog Enterprises 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days LeapFrog Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, LeapFrog Enterprises is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Sony Group 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Sony Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sony is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LeapFrog Enterprises and Sony Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LeapFrog Enterprises and Sony

The main advantage of trading using opposite LeapFrog Enterprises and Sony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LeapFrog Enterprises position performs unexpectedly, Sony 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 Sony will offset losses from the drop in Sony's long position.
The idea behind LeapFrog Enterprises and Sony Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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