Correlation Between Aozora Bank and SEDANA MEDICAL
Can any of the company-specific risk be diversified away by investing in both Aozora Bank and SEDANA MEDICAL 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 Aozora Bank and SEDANA MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aozora Bank and SEDANA MEDICAL AB, you can compare the effects of market volatilities on Aozora Bank and SEDANA MEDICAL 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 Aozora Bank with a short position of SEDANA MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aozora Bank and SEDANA MEDICAL.
Diversification Opportunities for Aozora Bank and SEDANA MEDICAL
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aozora and SEDANA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank and SEDANA MEDICAL AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEDANA MEDICAL AB and Aozora Bank 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 Aozora Bank are associated (or correlated) with SEDANA MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEDANA MEDICAL AB has no effect on the direction of Aozora Bank i.e., Aozora Bank and SEDANA MEDICAL go up and down completely randomly.
Pair Corralation between Aozora Bank and SEDANA MEDICAL
Assuming the 90 days horizon Aozora Bank is expected to under-perform the SEDANA MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, Aozora Bank is 2.97 times less risky than SEDANA MEDICAL. The stock trades about -0.08 of its potential returns per unit of risk. The SEDANA MEDICAL AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 94.00 in SEDANA MEDICAL AB on September 4, 2024 and sell it today you would earn a total of 13.00 from holding SEDANA MEDICAL AB or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aozora Bank vs. SEDANA MEDICAL AB
Performance |
| Timeline |
| Aozora Bank |
| SEDANA MEDICAL AB |
Aozora Bank and SEDANA MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aozora Bank and SEDANA MEDICAL
The main advantage of trading using opposite Aozora Bank and SEDANA MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aozora Bank position performs unexpectedly, SEDANA MEDICAL 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 SEDANA MEDICAL will offset losses from the drop in SEDANA MEDICAL's long position.The idea behind Aozora Bank and SEDANA MEDICAL AB 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.| SEDANA MEDICAL vs. Cogent Communications Holdings | SEDANA MEDICAL vs. RETAIL FOOD GROUP | SEDANA MEDICAL vs. Costco Wholesale Corp | SEDANA MEDICAL vs. Entravision Communications |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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