Correlation Between Focus Home and Japan Asia
Can any of the company-specific risk be diversified away by investing in both Focus Home and Japan Asia 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 Focus Home and Japan Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Home Interactive and Japan Asia Investment, you can compare the effects of market volatilities on Focus Home and Japan Asia 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 Focus Home with a short position of Japan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and Japan Asia.
Diversification Opportunities for Focus Home and Japan Asia
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Focus and Japan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Japan Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Asia Investment and Focus Home 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 Focus Home Interactive are associated (or correlated) with Japan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Asia Investment has no effect on the direction of Focus Home i.e., Focus Home and Japan Asia go up and down completely randomly.
Pair Corralation between Focus Home and Japan Asia
Assuming the 90 days horizon Focus Home Interactive is expected to under-perform the Japan Asia. In addition to that, Focus Home is 2.4 times more volatile than Japan Asia Investment. It trades about -0.07 of its total potential returns per unit of risk. Japan Asia Investment is currently generating about 0.01 per unit of volatility. If you would invest 128.00 in Japan Asia Investment on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Japan Asia Investment or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Focus Home Interactive vs. Japan Asia Investment
Performance |
Timeline |
Focus Home Interactive |
Japan Asia Investment |
Focus Home and Japan Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Focus Home and Japan Asia
The main advantage of trading using opposite Focus Home and Japan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Japan Asia 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 Japan Asia will offset losses from the drop in Japan Asia's long position.Focus Home vs. THRACE PLASTICS | Focus Home vs. Martin Marietta Materials | Focus Home vs. CREO MEDICAL GRP | Focus Home vs. PEPTONIC MEDICAL |
Japan Asia vs. CompuGroup Medical SE | Japan Asia vs. Scientific Games | Japan Asia vs. Diamyd Medical AB | Japan Asia vs. PENN NATL GAMING |
Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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