Correlation Between Japan Post and Platinum Investment
Can any of the company-specific risk be diversified away by investing in both Japan Post and Platinum Investment 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 Platinum Investment 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 Platinum Investment Management, you can compare the effects of market volatilities on Japan Post and Platinum Investment 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 Platinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Platinum Investment.
Diversification Opportunities for Japan Post and Platinum Investment
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Platinum is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Japan Post i.e., Japan Post and Platinum Investment go up and down completely randomly.
Pair Corralation between Japan Post and Platinum Investment
Assuming the 90 days trading horizon Japan Post is expected to generate 1.13 times less return on investment than Platinum Investment. But when comparing it to its historical volatility, Japan Post Insurance is 1.02 times less risky than Platinum Investment. It trades about 0.05 of its potential returns per unit of risk. Platinum Investment Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Platinum Investment Management on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Platinum Investment Management or generate 12.28% 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. Platinum Investment Management
Performance |
| Timeline |
| Japan Post Insurance |
| Platinum Investment |
Japan Post and Platinum Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Platinum Investment
The main advantage of trading using opposite Japan Post and Platinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Platinum Investment 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 Platinum Investment will offset losses from the drop in Platinum Investment's long position.The idea behind Japan Post Insurance and Platinum Investment Management 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.| Platinum Investment vs. Japan Post Insurance | Platinum Investment vs. Safety Insurance Group | Platinum Investment vs. Singapore Reinsurance | Platinum Investment vs. Quaker Chemical |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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