Correlation Between Square Enix and Capcom Co

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

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

Diversification Opportunities for Square Enix and Capcom Co

0.03

Correlation Coefficient

Square Enix  Capcom Co

Significant diversification

The 3 months correlation between Square and Capcom is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Square Enix Holdings and Capcom Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co and Square Enix 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 Square Enix Holdings are associated (or correlated) with Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of Square Enix i.e., Square Enix and Capcom Co go up and down completely randomly.

Pair Corralation between Square Enix and Capcom Co

Assuming the 90 days horizon Square Enix Holdings is expected to generate 38.56 times more return on investment than Capcom Co. However, Square Enix is 38.56 times more volatile than Capcom Co Ltd. It trades about 0.24 of its potential returns per unit of risk. Capcom Co Ltd is currently generating about -0.02 per unit of risk. If you would invest  7,053  in Square Enix Holdings on July 16, 2025 and sell it today you would lose (5,168) from holding Square Enix Holdings or give up 73.27% of portfolio value over 90 days.

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

Square Enix Holdings  vs.  Capcom Co Ltd

Square Enix Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Square Enix Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Square Enix reported solid returns over the last few months and may actually be approaching a breakup point.

Capcom Co

Risk-Adjusted Performance

Weakest

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.

Pair Trading with Square Enix and Capcom Co

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

The idea behind Square Enix Holdings and Capcom Co Ltd 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..