Correlation Between Ajinomoto and 3M

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ajinomoto and 3M 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 Ajinomoto and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ajinomoto Co and 3M Company, you can compare the effects of market volatilities on Ajinomoto and 3M 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 Ajinomoto with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ajinomoto and 3M.

Diversification Opportunities for Ajinomoto and 3M

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ajinomoto and 3M is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ajinomoto Co and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and Ajinomoto 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 Ajinomoto Co are associated (or correlated) with 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of Ajinomoto i.e., Ajinomoto and 3M go up and down completely randomly.

Pair Corralation between Ajinomoto and 3M

Assuming the 90 days horizon Ajinomoto is expected to generate 2.66 times less return on investment than 3M. But when comparing it to its historical volatility, Ajinomoto Co is 1.14 times less risky than 3M. It trades about 0.09 of its potential returns per unit of risk. 3M Company is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  10,983  in 3M Company on September 6, 2022 and sell it today you would earn a total of  1,716  from holding 3M Company or generate 15.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ajinomoto Co  vs.  3M Company

 Performance (%) 
       Timeline  
Ajinomoto 
Ajinomoto Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ajinomoto Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ajinomoto may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Ajinomoto Price Channel

3M Company 
3M Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, 3M may actually be approaching a critical reversion point that can send shares even higher in January 2023.

3M Price Channel

Ajinomoto and 3M Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ajinomoto and 3M

The main advantage of trading using opposite Ajinomoto and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ajinomoto position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M's long position.
Ajinomoto vs. Davidstea
Ajinomoto vs. Ambev SA ADR
Ajinomoto vs. Albertsons Companies
Ajinomoto vs. Acme United
The idea behind Ajinomoto Co and 3M Company 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.
3M vs. Allison Transmission Holdings
3M vs. Commercial Vehicle Group
3M vs. LB Foster
3M vs. Greenbrier Companies
Check out your portfolio center. 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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go