Correlation Between Japan Post and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Japan Post and Air Liquide 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 Air Liquide 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 Air Liquide SA, you can compare the effects of market volatilities on Japan Post and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Air Liquide.
Diversification Opportunities for Japan Post and Air Liquide
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Air is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Japan Post i.e., Japan Post and Air Liquide go up and down completely randomly.
Pair Corralation between Japan Post and Air Liquide
Assuming the 90 days trading horizon Japan Post is expected to generate 1.44 times less return on investment than Air Liquide. In addition to that, Japan Post is 1.14 times more volatile than Air Liquide SA. It trades about 0.21 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.34 per unit of volatility. If you would invest 15,812 in Air Liquide SA on November 5, 2024 and sell it today you would earn a total of 1,046 from holding Air Liquide SA or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. Air Liquide SA
Performance |
| Timeline |
| Japan Post Insurance |
| Air Liquide SA |
Japan Post and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Air Liquide
The main advantage of trading using opposite Japan Post and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Japan Post vs. Safety Insurance Group | Japan Post vs. G III Apparel Group | Japan Post vs. CarsalesCom | Japan Post vs. The Hanover Insurance |
| Air Liquide vs. X FAB Silicon Foundries | Air Liquide vs. X FAB Silicon Foundries | Air Liquide vs. Kingdee International Software | Air Liquide vs. Magnachip Semiconductor |
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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