Correlation Between Japan Post and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both Japan Post and Prosiebensat 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 Prosiebensat 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 Prosiebensat 1 Media, you can compare the effects of market volatilities on Japan Post and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Prosiebensat.
Diversification Opportunities for Japan Post and Prosiebensat
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Japan and Prosiebensat is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Japan Post i.e., Japan Post and Prosiebensat go up and down completely randomly.
Pair Corralation between Japan Post and Prosiebensat
Assuming the 90 days trading horizon Japan Post Insurance is expected to under-perform the Prosiebensat. But the stock apears to be less risky and, when comparing its historical volatility, Japan Post Insurance is 2.88 times less risky than Prosiebensat. The stock trades about -0.34 of its potential returns per unit of risk. The Prosiebensat 1 Media is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 475.00 in Prosiebensat 1 Media on September 26, 2024 and sell it today you would earn a total of 26.00 from holding Prosiebensat 1 Media or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. Prosiebensat 1 Media
Performance |
| Timeline |
| Japan Post Insurance |
| Prosiebensat 1 Media |
Japan Post and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Prosiebensat
The main advantage of trading using opposite Japan Post and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.The idea behind Japan Post Insurance and Prosiebensat 1 Media 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.| Prosiebensat vs. Aozora Bank | Prosiebensat vs. ALIOR BANK | Prosiebensat vs. OFFICE DEPOT | Prosiebensat vs. Webster Financial |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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