Correlation Between Japan Post and Omeros
Can any of the company-specific risk be diversified away by investing in both Japan Post and Omeros 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 Japan Post and Omeros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Insurance and Omeros, you can compare the effects of market volatilities on Japan Post and Omeros 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 Japan Post with a short position of Omeros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Omeros.
Diversification Opportunities for Japan Post and Omeros
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Japan and Omeros is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros and Japan Post 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 Japan Post Insurance are associated (or correlated) with Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of Japan Post i.e., Japan Post and Omeros go up and down completely randomly.
Pair Corralation between Japan Post and Omeros
Assuming the 90 days trading horizon Japan Post is expected to generate 13.01 times less return on investment than Omeros. But when comparing it to its historical volatility, Japan Post Insurance is 4.11 times less risky than Omeros. It trades about 0.02 of its potential returns per unit of risk. Omeros is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 266.00 in Omeros on October 9, 2024 and sell it today you would earn a total of 781.00 from holding Omeros or generate 293.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. Omeros
Performance |
| Timeline |
| Japan Post Insurance |
| Omeros |
Japan Post and Omeros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Omeros
The main advantage of trading using opposite Japan Post and Omeros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Omeros 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 Omeros will offset losses from the drop in Omeros' long position.The idea behind Japan Post Insurance and Omeros 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.| Omeros vs. Virtu Financial | Omeros vs. Synovus Financial Corp | Omeros vs. Compagnie Plastic Omnium | Omeros vs. JSC Halyk bank |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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