Correlation Between Canon Marketing and IBU-tec Advanced

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

Diversification Opportunities for Canon Marketing and IBU-tec Advanced

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Canon and IBU-tec is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and IBU tec advanced materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBU tec advanced and Canon Marketing 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 Canon Marketing Japan are associated (or correlated) with IBU-tec Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBU tec advanced has no effect on the direction of Canon Marketing i.e., Canon Marketing and IBU-tec Advanced go up and down completely randomly.

Pair Corralation between Canon Marketing and IBU-tec Advanced

Assuming the 90 days horizon Canon Marketing Japan is expected to under-perform the IBU-tec Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Canon Marketing Japan is 2.27 times less risky than IBU-tec Advanced. The stock trades about -0.03 of its potential returns per unit of risk. The IBU tec advanced materials is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  576.00  in IBU tec advanced materials on April 10, 2025 and sell it today you would earn a total of  62.00  from holding IBU tec advanced materials or generate 10.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.39%
ValuesDaily Returns

Canon Marketing Japan  vs.  IBU tec advanced materials

 Performance 
       Timeline  
Canon Marketing Japan 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Canon Marketing Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canon Marketing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
IBU tec advanced 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in IBU tec advanced materials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, IBU-tec Advanced unveiled solid returns over the last few months and may actually be approaching a breakup point.

Canon Marketing and IBU-tec Advanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Canon Marketing and IBU-tec Advanced

The main advantage of trading using opposite Canon Marketing and IBU-tec Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon Marketing position performs unexpectedly, IBU-tec Advanced 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 IBU-tec Advanced will offset losses from the drop in IBU-tec Advanced's long position.
The idea behind Canon Marketing Japan and IBU tec advanced materials 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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