Correlation Between Japan Post and Scientific Games
Can any of the company-specific risk be diversified away by investing in both Japan Post and Scientific Games 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 Scientific Games 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 Scientific Games, you can compare the effects of market volatilities on Japan Post and Scientific Games 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 Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Scientific Games.
Diversification Opportunities for Japan Post and Scientific Games
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Japan and Scientific is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of Japan Post i.e., Japan Post and Scientific Games go up and down completely randomly.
Pair Corralation between Japan Post and Scientific Games
Assuming the 90 days trading horizon Japan Post Insurance is expected to generate 0.74 times more return on investment than Scientific Games. However, Japan Post Insurance is 1.35 times less risky than Scientific Games. It trades about -0.19 of its potential returns per unit of risk. Scientific Games is currently generating about -0.17 per unit of risk. If you would invest 1,960 in Japan Post Insurance on October 30, 2024 and sell it today you would lose (170.00) from holding Japan Post Insurance or give up 8.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. Scientific Games
Performance |
| Timeline |
| Japan Post Insurance |
| Scientific Games |
Japan Post and Scientific Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Scientific Games
The main advantage of trading using opposite Japan Post and Scientific Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Scientific Games 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 Scientific Games will offset losses from the drop in Scientific Games' long position.| Japan Post vs. MOVIE GAMES SA | Japan Post vs. GOLD ROAD RES | Japan Post vs. Scandinavian Tobacco Group | Japan Post vs. British American Tobacco |
| Scientific Games vs. Acadia Healthcare | Scientific Games vs. PURETECH HEALTH PLC | Scientific Games vs. CARDINAL HEALTH | Scientific Games vs. Sunstone Hotel Investors |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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