Correlation Between HOKURIKU and Air Lease
Can any of the company-specific risk be diversified away by investing in both HOKURIKU and Air Lease 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 HOKURIKU and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOKURIKU EL PWR and Air Lease, you can compare the effects of market volatilities on HOKURIKU and Air Lease 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 HOKURIKU with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOKURIKU and Air Lease.
Diversification Opportunities for HOKURIKU and Air Lease
Very weak diversification
The 3 months correlation between HOKURIKU and Air is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding HOKURIKU EL PWR and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and HOKURIKU 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 HOKURIKU EL PWR are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of HOKURIKU i.e., HOKURIKU and Air Lease go up and down completely randomly.
Pair Corralation between HOKURIKU and Air Lease
Assuming the 90 days horizon HOKURIKU is expected to generate 1.49 times less return on investment than Air Lease. But when comparing it to its historical volatility, HOKURIKU EL PWR is 1.06 times less risky than Air Lease. It trades about 0.08 of its potential returns per unit of risk. Air Lease is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,380 in Air Lease on December 4, 2024 and sell it today you would earn a total of 200.00 from holding Air Lease or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOKURIKU EL PWR vs. Air Lease
Performance |
| Timeline |
| HOKURIKU EL PWR |
| Air Lease |
HOKURIKU and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOKURIKU and Air Lease
The main advantage of trading using opposite HOKURIKU and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOKURIKU position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| HOKURIKU vs. APPLIED MATERIALS | HOKURIKU vs. Sqs Software Quality | HOKURIKU vs. Alfa Financial Software | HOKURIKU vs. VULCAN MATERIALS |
| Air Lease vs. BORR DRILLING NEW | Air Lease vs. PRECISION DRILLING P | Air Lease vs. Computer And Technologies | Air Lease vs. GMO INTERNET |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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