Correlation Between BANDAI NAMCO and Korian

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

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

Diversification Opportunities for BANDAI NAMCO and Korian

0.57

Correlation Coefficient

BANDAI NAMCO  Korian

Very weak diversification

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

Pair Corralation between BANDAI NAMCO and Korian

Assuming the 90 days horizon BANDAI NAMCO is expected to generate 7.09 times less return on investment than Korian. But when comparing it to its historical volatility, BANDAI NAMCO Holdings is 5.66 times less risky than Korian. It trades about 0.17 of its potential returns per unit of risk. Korian is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Korian on February 4, 2024 and sell it today you would earn a total of  70.00  from holding Korian or generate 38.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

BANDAI NAMCO Holdings  vs.  Korian

BANDAI NAMCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANDAI NAMCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Korian

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Korian are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Korian reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANDAI NAMCO and Korian

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

The idea behind BANDAI NAMCO Holdings and Korian 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.