Correlation Between Alps Electric and Sharp Corp

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

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

Diversification Opportunities for Alps Electric and Sharp Corp

-0.32

Correlation Coefficient

Alps Electric  Sharp Corp

Very good diversification

The 3 months correlation between Alps and Sharp is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alps Electric Co and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR and Alps Electric 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 Alps Electric Co are associated (or correlated) with Sharp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of Alps Electric i.e., Alps Electric and Sharp Corp go up and down completely randomly.

Pair Corralation between Alps Electric and Sharp Corp

Assuming the 90 days horizon Alps Electric Co is expected to generate 0.95 times more return on investment than Sharp Corp. However, Alps Electric Co is 1.06 times less risky than Sharp Corp. It trades about 0.06 of its potential returns per unit of risk. Sharp Corp ADR is currently generating about -0.16 per unit of risk. If you would invest  1,934  in Alps Electric Co on May 1, 2025 and sell it today you would earn a total of  134.00  from holding Alps Electric Co or generate 6.93% return on investment over 90 days.

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

Alps Electric Co  vs.  Sharp Corp ADR

Alps Electric

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alps Electric Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Alps Electric may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Sharp Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sharp Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alps Electric and Sharp Corp

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

The idea behind Alps Electric Co and Sharp Corp ADR 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.