Correlation Between MISUMI and Cytokinetics

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

Diversification Opportunities for MISUMI and Cytokinetics

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between MISUMI and Cytokinetics is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MISUMI Group and Cytokinetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytokinetics and MISUMI 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 MISUMI Group are associated (or correlated) with Cytokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytokinetics has no effect on the direction of MISUMI i.e., MISUMI and Cytokinetics go up and down completely randomly.

Pair Corralation between MISUMI and Cytokinetics

Assuming the 90 days horizon MISUMI Group is expected to generate 2.67 times more return on investment than Cytokinetics. However, MISUMI is 2.67 times more volatile than Cytokinetics. It trades about 0.05 of its potential returns per unit of risk. Cytokinetics is currently generating about 0.05 per unit of risk. If you would invest  1,419  in MISUMI Group on September 4, 2022 and sell it today you would earn a total of  710.00  from holding MISUMI Group or generate 50.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

MISUMI Group  vs.  Cytokinetics

 Performance (%) 
       Timeline  
MISUMI Group 
MISUMI Performance
0 of 100
Over the last 90 days MISUMI Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MISUMI Price Channel

Cytokinetics 
Cytokinetics Performance
0 of 100
Over the last 90 days Cytokinetics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cytokinetics Price Channel

MISUMI and Cytokinetics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MISUMI and Cytokinetics

The main advantage of trading using opposite MISUMI and Cytokinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MISUMI position performs unexpectedly, Cytokinetics 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 Cytokinetics will offset losses from the drop in Cytokinetics' long position.
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The idea behind MISUMI Group and Cytokinetics 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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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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