Correlation Between Rubis SCA and Tokyo Gas

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

By analyzing existing cross correlation between Rubis SCA ADR and Tokyo Gas Co, you can compare the effects of market volatilities on Rubis SCA and Tokyo Gas 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 Rubis SCA with a short position of Tokyo Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rubis SCA and Tokyo Gas.

Diversification Opportunities for Rubis SCA and Tokyo Gas

0.59

Correlation Coefficient

Rubis SCA  Tokyo Gas

Very weak diversification

The 3 months correlation between Rubis and Tokyo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rubis SCA ADR and Tokyo Gas Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Gas and Rubis SCA 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 Rubis SCA ADR are associated (or correlated) with Tokyo Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Gas has no effect on the direction of Rubis SCA i.e., Rubis SCA and Tokyo Gas go up and down completely randomly.

Pair Corralation between Rubis SCA and Tokyo Gas

Assuming the 90 days horizon Rubis SCA ADR is expected to under-perform the Tokyo Gas. In addition to that, Rubis SCA is 1.11 times more volatile than Tokyo Gas Co. It trades about -0.16 of its total potential returns per unit of risk. Tokyo Gas Co is currently generating about 0.03 per unit of volatility. If you would invest  1,148  in Tokyo Gas Co on February 5, 2024 and sell it today you would earn a total of  10.00  from holding Tokyo Gas Co or generate 0.87% return on investment over 90 days.

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

Rubis SCA ADR  vs.  Tokyo Gas Co

Rubis SCA ADR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rubis SCA ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Rubis SCA showed solid returns over the last few months and may actually be approaching a breakup point.

Tokyo Gas

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Rubis SCA and Tokyo Gas

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

The idea behind Rubis SCA ADR and Tokyo Gas Co 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.