Correlation Between Canon and Hauppauge Digital

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

By analyzing existing cross correlation between Canon Inc ADR and Hauppauge Digital OTC, you can compare the effects of market volatilities on Canon and Hauppauge Digital 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 with a short position of Hauppauge Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and Hauppauge Digital.

Diversification Opportunities for Canon and Hauppauge Digital

-0.28

Correlation Coefficient

Canon  Hauppauge Digital

Very good diversification

The 3 months correlation between Canon and Hauppauge is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc ADR and Hauppauge Digital OTC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hauppauge Digital OTC and Canon 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 Inc ADR are associated (or correlated) with Hauppauge Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hauppauge Digital OTC has no effect on the direction of Canon i.e., Canon and Hauppauge Digital go up and down completely randomly.

Pair Corralation between Canon and Hauppauge Digital

If you would invest  2.00  in Hauppauge Digital OTC on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Hauppauge Digital OTC or generate 0.0% return on investment over 90 days.

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

Canon Inc ADR  vs.  Hauppauge Digital OTC

Canon Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canon Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Canon is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Hauppauge Digital OTC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hauppauge Digital OTC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hauppauge Digital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Canon and Hauppauge Digital

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

The idea behind Canon Inc ADR and Hauppauge Digital OTC 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 Global Correlations module to find global opportunities by holding instruments from different markets.