Correlation Between Wearable Devices and Sony Corp

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

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

Diversification Opportunities for Wearable Devices and Sony Corp

-0.17

Correlation Coefficient

Wearable Devices  Sony Corp

Good diversification

The 3 months correlation between Wearable and Sony is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Devices and Sony Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Corp and Wearable Devices 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 Wearable Devices are associated (or correlated) with Sony Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Corp has no effect on the direction of Wearable Devices i.e., Wearable Devices and Sony Corp go up and down completely randomly.

Pair Corralation between Wearable Devices and Sony Corp

Assuming the 90 days horizon Wearable Devices is expected to generate 3.36 times less return on investment than Sony Corp. In addition to that, Wearable Devices is 2.8 times more volatile than Sony Corp. It trades about 0.0 of its total potential returns per unit of risk. Sony Corp is currently generating about 0.02 per unit of volatility. If you would invest  2,530  in Sony Corp on May 7, 2025 and sell it today you would earn a total of  3.00  from holding Sony Corp or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.93%
Values	Daily Returns

Wearable Devices  vs.  Sony Corp

Wearable Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wearable Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wearable Devices is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sony Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Sony Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wearable Devices and Sony Corp

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

The idea behind Wearable Devices and Sony Corp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.