Correlation Between Inoue Rubber and CHAOSUA FOODS

Can any of the company-specific risk be diversified away by investing in both Inoue Rubber and CHAOSUA FOODS 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 CHAOSUA FOODS 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 CHAOSUA FOODS INDUSTRY, you can compare the effects of market volatilities on Inoue Rubber and CHAOSUA FOODS 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 CHAOSUA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inoue Rubber and CHAOSUA FOODS.

Diversification Opportunities for Inoue Rubber and CHAOSUA FOODS

0.67

Correlation Coefficient

Inoue Rubber  CHAOSUA FOODS

Poor diversification

The 3 months correlation between Inoue and CHAOSUA is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Inoue Rubber Public and CHAOSUA FOODS INDUSTRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAOSUA FOODS INDUSTRY 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 CHAOSUA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAOSUA FOODS INDUSTRY has no effect on the direction of Inoue Rubber i.e., Inoue Rubber and CHAOSUA FOODS go up and down completely randomly.

Pair Corralation between Inoue Rubber and CHAOSUA FOODS

Assuming the 90 days trading horizon Inoue Rubber Public is expected to generate 0.54 times more return on investment than CHAOSUA FOODS. However, Inoue Rubber Public is 1.86 times less risky than CHAOSUA FOODS. It trades about -0.02 of its potential returns per unit of risk. CHAOSUA FOODS INDUSTRY is currently generating about -0.08 per unit of risk. If you would invest  1,140  in Inoue Rubber Public on April 24, 2025 and sell it today you would lose (20.00) from holding Inoue Rubber Public or give up 1.75% of portfolio value over 90 days.

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

Inoue Rubber Public  vs.  CHAOSUA FOODS INDUSTRY

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.

CHAOSUA FOODS INDUSTRY

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHAOSUA FOODS INDUSTRY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Inoue Rubber and CHAOSUA FOODS

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

The idea behind Inoue Rubber Public and CHAOSUA FOODS INDUSTRY 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.