Correlation Between Inoue Rubber and BPS TECHNOLOGY

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

By analyzing existing cross correlation between Inoue Rubber Public and BPS TECHNOLOGY PUBLIC, you can compare the effects of market volatilities on Inoue Rubber and BPS TECHNOLOGY 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 Inoue Rubber with a short position of BPS TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inoue Rubber and BPS TECHNOLOGY.

Diversification Opportunities for Inoue Rubber and BPS TECHNOLOGY

0.02

Correlation Coefficient

Inoue Rubber  BPS TECHNOLOGY

Significant diversification

The 3 months correlation between Inoue and BPS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Inoue Rubber Public and BPS TECHNOLOGY PUBLIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPS TECHNOLOGY PUBLIC and Inoue Rubber 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 Inoue Rubber Public are associated (or correlated) with BPS TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPS TECHNOLOGY PUBLIC has no effect on the direction of Inoue Rubber i.e., Inoue Rubber and BPS TECHNOLOGY go up and down completely randomly.

Pair Corralation between Inoue Rubber and BPS TECHNOLOGY

Assuming the 90 days trading horizon Inoue Rubber Public is expected to under-perform the BPS TECHNOLOGY. But the stock apears to be less risky and, when comparing its historical volatility, Inoue Rubber Public is 2.24 times less risky than BPS TECHNOLOGY. The stock trades about -0.02 of its potential returns per unit of risk. The BPS TECHNOLOGY PUBLIC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  52.00  in BPS TECHNOLOGY PUBLIC on April 24, 2025 and sell it today you would earn a total of  1.00  from holding BPS TECHNOLOGY PUBLIC or generate 1.92% return on investment over 90 days.

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

Inoue Rubber Public  vs.  BPS TECHNOLOGY PUBLIC

Inoue Rubber Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inoue Rubber Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Inoue Rubber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

BPS TECHNOLOGY PUBLIC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BPS TECHNOLOGY PUBLIC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, BPS TECHNOLOGY is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Inoue Rubber and BPS TECHNOLOGY

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

The idea behind Inoue Rubber Public and BPS TECHNOLOGY PUBLIC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.