Correlation Between Sony Group and Panasonic Corp

Can any of the company-specific risk be diversified away by investing in both Sony Group and Panasonic Corp 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 Sony Group and Panasonic Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sony Group Corp and Panasonic Corp, you can compare the effects of market volatilities on Sony Group and Panasonic Corp 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 Sony Group with a short position of Panasonic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Group and Panasonic Corp.

Diversification Opportunities for Sony Group and Panasonic Corp

0.57

Correlation Coefficient

Sony Group  Panasonic Corp

Very weak diversification

The 3 months correlation between Sony and Panasonic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group Corp and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic Corp and Sony Group 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 Sony Group Corp are associated (or correlated) with Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of Sony Group i.e., Sony Group and Panasonic Corp go up and down completely randomly.

Pair Corralation between Sony Group and Panasonic Corp

Assuming the 90 days trading horizon Sony Group Corp is expected to generate 0.88 times more return on investment than Panasonic Corp. However, Sony Group Corp is 1.13 times less risky than Panasonic Corp. It trades about -0.04 of its potential returns per unit of risk. Panasonic Corp is currently generating about -0.08 per unit of risk. If you would invest  2,184  in Sony Group Corp on April 23, 2025 and sell it today you would lose (118.00) from holding Sony Group Corp or give up 5.4% of portfolio value over 90 days.

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

Sony Group Corp  vs.  Panasonic Corp

Sony Group Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sony Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sony Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Panasonic Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panasonic Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sony Group and Panasonic Corp

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

The idea behind Sony Group Corp and Panasonic Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..