Correlation Between Capcom Co and DeNA Co

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

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

Diversification Opportunities for Capcom Co and DeNA Co

-0.47

Correlation Coefficient

Capcom Co  DeNA Co

Very good diversification

The 3 months correlation between Capcom and DeNA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co Ltd and DeNA Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeNA Co and Capcom Co 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 Capcom Co Ltd are associated (or correlated) with DeNA Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeNA Co has no effect on the direction of Capcom Co i.e., Capcom Co and DeNA Co go up and down completely randomly.

Pair Corralation between Capcom Co and DeNA Co

Assuming the 90 days horizon Capcom Co Ltd is expected to generate 0.85 times more return on investment than DeNA Co. However, Capcom Co Ltd is 1.18 times less risky than DeNA Co. It trades about -0.03 of its potential returns per unit of risk. DeNA Co is currently generating about -0.16 per unit of risk. If you would invest  1,445  in Capcom Co Ltd on May 7, 2025 and sell it today you would lose (93.00) from holding Capcom Co Ltd or give up 6.44% of portfolio value over 90 days.

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

Capcom Co Ltd  vs.  DeNA Co

Capcom Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capcom Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Capcom Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DeNA Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days DeNA Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Capcom Co and DeNA Co

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

The idea behind Capcom Co Ltd and DeNA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.