Correlation Between Air France and Japan Airlines
Can any of the company-specific risk be diversified away by investing in both Air France and Japan Airlines 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 Air France and Japan Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air France KLM and Japan Airlines Ltd, you can compare the effects of market volatilities on Air France and Japan Airlines 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 Air France with a short position of Japan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Japan Airlines.
Diversification Opportunities for Air France and Japan Airlines
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Japan is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM and Japan Airlines Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Airlines and Air France 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 Air France KLM are associated (or correlated) with Japan Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Airlines has no effect on the direction of Air France i.e., Air France and Japan Airlines go up and down completely randomly.
Pair Corralation between Air France and Japan Airlines
If you would invest 1,089 in Japan Airlines Ltd on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Japan Airlines Ltd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.53% |
| Values | Daily Returns |
Air France KLM vs. Japan Airlines Ltd
Performance |
| Timeline |
| Air France KLM |
| Japan Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Air France and Japan Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Japan Airlines
The main advantage of trading using opposite Air France and Japan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Japan Airlines 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 Airlines will offset losses from the drop in Japan Airlines' long position.| Air France vs. International Consolidated Airlines | Air France vs. Air France KLM SA | Air France vs. Finnair Oyj | Air France vs. AirAsia Group Berhad |
| Japan Airlines vs. Qantas Airways Limited | Japan Airlines vs. Cathay Pacific Airways | Japan Airlines vs. Singapore Airlines | Japan Airlines vs. Singapore Airlines |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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