Correlation Between Logitech International and Canon

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

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

Diversification Opportunities for Logitech International and Canon

-0.51

Correlation Coefficient

Logitech International  Canon

Excellent diversification

The 3 months correlation between Logitech and Canon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Logitech International SA and Canon Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc ADR and Logitech International 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 Logitech International SA are associated (or correlated) with Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc ADR has no effect on the direction of Logitech International i.e., Logitech International and Canon go up and down completely randomly.

Pair Corralation between Logitech International and Canon

If you would invest  5,478  in Logitech International SA on January 20, 2024 and sell it today you would earn a total of  2,330  from holding Logitech International SA or generate 42.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Logitech International SA  vs.  Canon Inc ADR

Logitech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Logitech International SA 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Logitech International and Canon

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

The idea behind Logitech International SA and Canon Inc ADR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.