Correlation Between Japan Post and Yakult Honsha
Can any of the company-specific risk be diversified away by investing in both Japan Post and Yakult Honsha 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 Yakult Honsha 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 Yakult Honsha CoLtd, you can compare the effects of market volatilities on Japan Post and Yakult Honsha 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 Yakult Honsha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Yakult Honsha.
Diversification Opportunities for Japan Post and Yakult Honsha
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Yakult is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Yakult Honsha CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha CoLtd 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 Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha CoLtd has no effect on the direction of Japan Post i.e., Japan Post and Yakult Honsha go up and down completely randomly.
Pair Corralation between Japan Post and Yakult Honsha
Assuming the 90 days trading horizon Japan Post Insurance is expected to generate 0.97 times more return on investment than Yakult Honsha. However, Japan Post Insurance is 1.03 times less risky than Yakult Honsha. It trades about 0.02 of its potential returns per unit of risk. Yakult Honsha CoLtd is currently generating about -0.04 per unit of risk. If you would invest 1,640 in Japan Post Insurance on September 14, 2024 and sell it today you would earn a total of 220.00 from holding Japan Post Insurance or generate 13.41% 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. Yakult Honsha CoLtd
Performance |
| Timeline |
| Japan Post Insurance |
| Yakult Honsha CoLtd |
Japan Post and Yakult Honsha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Yakult Honsha
The main advantage of trading using opposite Japan Post and Yakult Honsha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Yakult Honsha 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 Yakult Honsha will offset losses from the drop in Yakult Honsha's long position.The idea behind Japan Post Insurance and Yakult Honsha CoLtd 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.| Yakult Honsha vs. Coca Cola FEMSA SAB | Yakult Honsha vs. Coca Cola HBC | Yakult Honsha vs. Coca Cola Consolidated | Yakult Honsha vs. Britvic plc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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