Correlation Between OMRON Corp and Canon

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

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

Diversification Opportunities for OMRON Corp and Canon

0.34

Correlation Coefficient

OMRON Corp  Canon

Weak diversification

The 3 months correlation between OMRON and Canon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding OMRON Corp ADR and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc and OMRON Corp 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 OMRON Corp ADR are associated (or correlated) with Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of OMRON Corp i.e., OMRON Corp and Canon go up and down completely randomly.

Pair Corralation between OMRON Corp and Canon

Assuming the 90 days horizon OMRON Corp ADR is expected to under-perform the Canon. But the pink sheet apears to be less risky and, when comparing its historical volatility, OMRON Corp ADR is 1.21 times less risky than Canon. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Canon Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,934  in Canon Inc on May 7, 2025 and sell it today you would lose (102.00) from holding Canon Inc or give up 3.48% of portfolio value over 90 days.

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

OMRON Corp ADR  vs.  Canon Inc

OMRON Corp ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days OMRON Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Canon Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Canon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Canon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with OMRON Corp and Canon

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

The idea behind OMRON Corp ADR and Canon Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.