Correlation Between Japan Post and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both Japan Post and Nippon Steel 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 Nippon Steel 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 Nippon Steel, you can compare the effects of market volatilities on Japan Post and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Nippon Steel.
Diversification Opportunities for Japan Post and Nippon Steel
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and Nippon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of Japan Post i.e., Japan Post and Nippon Steel go up and down completely randomly.
Pair Corralation between Japan Post and Nippon Steel
Assuming the 90 days trading horizon Japan Post is expected to generate 11.41 times less return on investment than Nippon Steel. But when comparing it to its historical volatility, Japan Post Insurance is 1.56 times less risky than Nippon Steel. It trades about 0.03 of its potential returns per unit of risk. Nippon Steel is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,748 in Nippon Steel on October 24, 2024 and sell it today you would earn a total of 140.00 from holding Nippon Steel or generate 8.01% 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. Nippon Steel
Performance |
| Timeline |
| Japan Post Insurance |
| Nippon Steel |
Japan Post and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Nippon Steel
The main advantage of trading using opposite Japan Post and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel's long position.| Japan Post vs. GAMING FAC SA | Japan Post vs. Games Workshop Group | Japan Post vs. Boyd Gaming | Japan Post vs. QINGCI GAMES INC |
| Nippon Steel vs. MUTUIONLINE | Nippon Steel vs. PARKEN Sport Entertainment | Nippon Steel vs. COLUMBIA SPORTSWEAR | Nippon Steel vs. BII Railway Transportation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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