Correlation Between Japan Post and Kulicke
Can any of the company-specific risk be diversified away by investing in both Japan Post and Kulicke 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 Kulicke 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 Kulicke and Soffa, you can compare the effects of market volatilities on Japan Post and Kulicke 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 Kulicke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Kulicke.
Diversification Opportunities for Japan Post and Kulicke
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Japan and Kulicke is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Kulicke and Soffa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kulicke and Soffa 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 Kulicke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kulicke and Soffa has no effect on the direction of Japan Post i.e., Japan Post and Kulicke go up and down completely randomly.
Pair Corralation between Japan Post and Kulicke
Assuming the 90 days trading horizon Japan Post Insurance is expected to generate 0.94 times more return on investment than Kulicke. However, Japan Post Insurance is 1.06 times less risky than Kulicke. It trades about 0.52 of its potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.12 per unit of risk. If you would invest 1,470 in Japan Post Insurance on August 27, 2024 and sell it today you would earn a total of 440.00 from holding Japan Post Insurance or generate 29.93% 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. Kulicke and Soffa
Performance |
| Timeline |
| Japan Post Insurance |
| Kulicke and Soffa |
Japan Post and Kulicke Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Kulicke
The main advantage of trading using opposite Japan Post and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Kulicke 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 Kulicke will offset losses from the drop in Kulicke's long position.The idea behind Japan Post Insurance and Kulicke and Soffa 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.| Kulicke vs. Corporate Travel Management | Kulicke vs. INFORMATION SVC GRP | Kulicke vs. DOCDATA | Kulicke vs. Fidelity National Information |
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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