Correlation Between Capcom Co and Sega Sammy

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

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

Diversification Opportunities for Capcom Co and Sega Sammy

0.9

Correlation Coefficient

Capcom Co  Sega Sammy

Almost no diversification

The 3 months correlation between Capcom and Sega is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co and Sega Sammy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sega Sammy Holdings and Capcom Co 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 Capcom Co are associated (or correlated) with Sega Sammy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sega Sammy Holdings has no effect on the direction of Capcom Co i.e., Capcom Co and Sega Sammy go up and down completely randomly.

Pair Corralation between Capcom Co and Sega Sammy

Assuming the 90 days horizon Capcom Co is expected to generate 2.11 times less return on investment than Sega Sammy. In addition to that, Capcom Co is 1.2 times more volatile than Sega Sammy Holdings. It trades about 0.06 of its total potential returns per unit of risk. Sega Sammy Holdings is currently generating about 0.15 per unit of volatility. If you would invest  381.00  in Sega Sammy Holdings on July 20, 2024 and sell it today you would earn a total of  118.00  from holding Sega Sammy Holdings or generate 30.97% return on investment over 90 days.

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

Capcom Co  vs.  Sega Sammy Holdings

Capcom Co

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capcom Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Capcom Co reported solid returns over the last few months and may actually be approaching a breakup point.

Sega Sammy Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sega Sammy Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Sega Sammy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capcom Co and Sega Sammy

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

The idea behind Capcom Co and Sega Sammy 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.