Correlation Between OriginClear and Hakuhodo

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

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

Diversification Opportunities for OriginClear and Hakuhodo

0.73

Correlation Coefficient

OriginClear  Hakuhodo

Poor diversification

The 3 months correlation between OriginClear and Hakuhodo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding OriginClear and Hakuhodo DY Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hakuhodo DY Holdings and OriginClear 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 OriginClear are associated (or correlated) with Hakuhodo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hakuhodo DY Holdings has no effect on the direction of OriginClear i.e., OriginClear and Hakuhodo go up and down completely randomly.

Pair Corralation between OriginClear and Hakuhodo

Given the investment horizon of 90 days OriginClear is expected to generate 4.47 times more return on investment than Hakuhodo. However, OriginClear is 4.47 times more volatile than Hakuhodo DY Holdings. It trades about 0.04 of its potential returns per unit of risk. Hakuhodo DY Holdings is currently generating about -0.01 per unit of risk. If you would invest  1.99  in OriginClear on January 20, 2024 and sell it today you would lose (0.90) from holding OriginClear or give up 45.23% of portfolio value over 90 days.

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

OriginClear  vs.  Hakuhodo DY Holdings

OriginClear

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OriginClear are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, OriginClear displayed solid returns over the last few months and may actually be approaching a breakup point.

Hakuhodo DY Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hakuhodo DY Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Hakuhodo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OriginClear and Hakuhodo

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

The idea behind OriginClear and Hakuhodo DY Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.