Correlation Between Aisin Seiki and Mobileye Global

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

By analyzing existing cross correlation between Aisin Seiki Co and Mobileye Global Class, you can compare the effects of market volatilities on Aisin Seiki and Mobileye Global 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 Aisin Seiki with a short position of Mobileye Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisin Seiki and Mobileye Global.

Diversification Opportunities for Aisin Seiki and Mobileye Global

0.73

Correlation Coefficient

Aisin Seiki  Mobileye Global

Poor diversification

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

Pair Corralation between Aisin Seiki and Mobileye Global

Assuming the 90 days horizon Aisin Seiki Co is expected to generate 0.65 times more return on investment than Mobileye Global. However, Aisin Seiki Co is 1.54 times less risky than Mobileye Global. It trades about -0.11 of its potential returns per unit of risk. Mobileye Global Class is currently generating about -0.29 per unit of risk. If you would invest  4,070  in Aisin Seiki Co on February 1, 2024 and sell it today you would lose (152.00) from holding Aisin Seiki Co or give up 3.73% of portfolio value over 90 days.

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

Aisin Seiki Co  vs.  Mobileye Global Class

Aisin Seiki

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aisin Seiki Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Aisin Seiki is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mobileye Global Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Mobileye Global may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Aisin Seiki and Mobileye Global

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

The idea behind Aisin Seiki Co and Mobileye Global Class 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.