Correlation Between General Commercial and Sato Office

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

By analyzing existing cross correlation between General Commercial Industrial and Sato office and, you can compare the effects of market volatilities on General Commercial and Sato Office 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 General Commercial with a short position of Sato Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Commercial and Sato Office.

Diversification Opportunities for General Commercial and Sato Office

0.75

Correlation Coefficient

General Commercial  Sato Office

Poor diversification

The 3 months correlation between General and Sato is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Commercial Industrial and Sato office and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sato office and General Commercial 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 General Commercial Industrial are associated (or correlated) with Sato Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sato office has no effect on the direction of General Commercial i.e., General Commercial and Sato Office go up and down completely randomly.

Pair Corralation between General Commercial and Sato Office

Assuming the 90 days trading horizon General Commercial Industrial is expected to generate 0.54 times more return on investment than Sato Office. However, General Commercial Industrial is 1.85 times less risky than Sato Office. It trades about -0.15 of its potential returns per unit of risk. Sato office and is currently generating about -0.24 per unit of risk. If you would invest  183.00  in General Commercial Industrial on February 28, 2024 and sell it today you would lose (30.00) from holding General Commercial Industrial or give up 16.39% of portfolio value over 90 days.

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

General Commercial Industrial  vs.  Sato office and

General Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Commercial Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Sato office

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sato office and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with General Commercial and Sato Office

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

The idea behind General Commercial Industrial and Sato office and 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.