Correlation Between Japan Post and Trip Group
Can any of the company-specific risk be diversified away by investing in both Japan Post and Trip Group 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 Trip Group 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 Trip Group Limited, you can compare the effects of market volatilities on Japan Post and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Trip Group.
Diversification Opportunities for Japan Post and Trip Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Japan and Trip is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Trip Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group Limited 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 Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group Limited has no effect on the direction of Japan Post i.e., Japan Post and Trip Group go up and down completely randomly.
Pair Corralation between Japan Post and Trip Group
Assuming the 90 days trading horizon Japan Post is expected to generate 1.59 times less return on investment than Trip Group. But when comparing it to its historical volatility, Japan Post Insurance is 1.41 times less risky than Trip Group. It trades about 0.05 of its potential returns per unit of risk. Trip Group Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,020 in Trip Group Limited on September 3, 2024 and sell it today you would earn a total of 1,080 from holding Trip Group Limited or generate 21.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. Trip Group Limited
Performance |
| Timeline |
| Japan Post Insurance |
| Trip Group Limited |
Japan Post and Trip Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Trip Group
The main advantage of trading using opposite Japan Post and Trip Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Trip Group 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 Trip Group will offset losses from the drop in Trip Group's long position.| Japan Post vs. Entravision Communications | Japan Post vs. Spirent Communications plc | Japan Post vs. JSC Halyk bank | Japan Post vs. Chiba Bank |
| Trip Group vs. WIMFARM SA EO | Trip Group vs. Sterling Construction | Trip Group vs. HYDROFARM HLD GRP | Trip Group vs. G8 EDUCATION |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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