Correlation Between Global Ship and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both Global Ship and JAPAN AIRLINES 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 Global Ship and JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and JAPAN AIRLINES, you can compare the effects of market volatilities on Global Ship and JAPAN AIRLINES 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 Global Ship with a short position of JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and JAPAN AIRLINES.
Diversification Opportunities for Global Ship and JAPAN AIRLINES
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and JAPAN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES and Global Ship 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 Global Ship Lease are associated (or correlated) with JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of Global Ship i.e., Global Ship and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between Global Ship and JAPAN AIRLINES
Assuming the 90 days horizon Global Ship Lease is expected to generate 2.31 times more return on investment than JAPAN AIRLINES. However, Global Ship is 2.31 times more volatile than JAPAN AIRLINES. It trades about 0.06 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.41 per unit of risk. If you would invest 2,080 in Global Ship Lease on October 11, 2024 and sell it today you would earn a total of 44.00 from holding Global Ship Lease or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. JAPAN AIRLINES
Performance |
| Timeline |
| Global Ship Lease |
| JAPAN AIRLINES |
Global Ship and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and JAPAN AIRLINES
The main advantage of trading using opposite Global Ship and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, JAPAN AIRLINES 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 AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| Global Ship vs. CEOTRONICS | Global Ship vs. Coor Service Management | Global Ship vs. Pure Storage | Global Ship vs. LANDSEA GREEN MANAGEMENT |
| JAPAN AIRLINES vs. National Beverage Corp | JAPAN AIRLINES vs. INDOFOOD AGRI RES | JAPAN AIRLINES vs. GRIFFIN MINING LTD | JAPAN AIRLINES vs. VIVA WINE GROUP |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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