Correlation Between AOYAMA TRADING and Japan Steel
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING and Japan Steel 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 AOYAMA TRADING and Japan Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and The Japan Steel, you can compare the effects of market volatilities on AOYAMA TRADING and Japan Steel 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 AOYAMA TRADING with a short position of Japan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and Japan Steel.
Diversification Opportunities for AOYAMA TRADING and Japan Steel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AOYAMA and Japan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and The Japan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Steel and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with Japan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Steel has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and Japan Steel go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and Japan Steel
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 0.5 times more return on investment than Japan Steel. However, AOYAMA TRADING is 2.01 times less risky than Japan Steel. It trades about -0.04 of its potential returns per unit of risk. The Japan Steel is currently generating about -0.06 per unit of risk. If you would invest 1,360 in AOYAMA TRADING on October 26, 2024 and sell it today you would lose (30.00) from holding AOYAMA TRADING or give up 2.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AOYAMA TRADING vs. The Japan Steel
Performance |
| Timeline |
| AOYAMA TRADING |
| Japan Steel |
AOYAMA TRADING and Japan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOYAMA TRADING and Japan Steel
The main advantage of trading using opposite AOYAMA TRADING and Japan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING position performs unexpectedly, Japan Steel 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 Japan Steel will offset losses from the drop in Japan Steel's long position.| AOYAMA TRADING vs. CVS Health | AOYAMA TRADING vs. EPSILON HEALTHCARE LTD | AOYAMA TRADING vs. US Physical Therapy | AOYAMA TRADING vs. Cardinal Health |
| Japan Steel vs. CDL INVESTMENT | Japan Steel vs. AOYAMA TRADING | Japan Steel vs. Corsair Gaming | Japan Steel vs. Air New Zealand |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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