Correlation Between Sony Group and Sony Corp

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

Diversification Opportunities for Sony Group and Sony Corp

0.78

Correlation Coefficient

Sony Group  Sony Corp

Poor diversification

The 3 months correlation between Sony and Sony is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group Corp and Sony Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony 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 Sony Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Corp has no effect on the direction of Sony Group i.e., Sony Group and Sony Corp go up and down completely randomly.

Pair Corralation between Sony Group and Sony Corp

Given the investment horizon of 90 days Sony Group is expected to generate 1.54 times less return on investment than Sony Corp. But when comparing it to its historical volatility, Sony Group Corp is 1.16 times less risky than Sony Corp. It trades about 0.01 of its potential returns per unit of risk. Sony Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,550  in Sony Corp on February 3, 2024 and sell it today you would lose (116.00) from holding Sony Corp or give up 1.36% of portfolio value over 90 days.

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

Sony Group Corp  vs.  Sony Corp

Sony Group Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sony Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Sony Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sony Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sony Group and Sony Corp

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

The idea behind Sony Group Corp and Sony 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..