Correlation Between Sharp Corp and OMRON Corp

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

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

Diversification Opportunities for Sharp Corp and OMRON Corp

0.76

Correlation Coefficient

Sharp Corp  OMRON Corp

Poor diversification

The 3 months correlation between Sharp and OMRON is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sharp Corp ADR and OMRON Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMRON Corp ADR and Sharp 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 Sharp Corp ADR are associated (or correlated) with OMRON Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMRON Corp ADR has no effect on the direction of Sharp Corp i.e., Sharp Corp and OMRON Corp go up and down completely randomly.

Pair Corralation between Sharp Corp and OMRON Corp

Assuming the 90 days horizon Sharp Corp ADR is expected to under-perform the OMRON Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sharp Corp ADR is 1.07 times less risky than OMRON Corp. The pink sheet trades about -0.1 of its potential returns per unit of risk. The OMRON Corp ADR is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,968  in OMRON Corp ADR on May 7, 2025 and sell it today you would lose (280.00) from holding OMRON Corp ADR or give up 9.43% of portfolio value over 90 days.

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

Sharp Corp ADR  vs.  OMRON Corp ADR

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 September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

OMRON Corp ADR

Risk-Adjusted Performance

Very Weak

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.

Pair Trading with Sharp Corp and OMRON Corp

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

The idea behind Sharp Corp ADR and OMRON 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.