Correlation Between APA and Japan Petroleum
Can any of the company-specific risk be diversified away by investing in both APA and Japan Petroleum 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 APA and Japan Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Japan Petroleum Exploration, you can compare the effects of market volatilities on APA and Japan Petroleum 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 APA with a short position of Japan Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Japan Petroleum.
Diversification Opportunities for APA and Japan Petroleum
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APA and Japan is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Japan Petroleum Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Petroleum Expl and APA 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 APA Corporation are associated (or correlated) with Japan Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Petroleum Expl has no effect on the direction of APA i.e., APA and Japan Petroleum go up and down completely randomly.
Pair Corralation between APA and Japan Petroleum
If you would invest 3,044 in Japan Petroleum Exploration on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Japan Petroleum Exploration or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
APA Corp. vs. Japan Petroleum Exploration
Performance |
| Timeline |
| APA Corporation |
| Japan Petroleum Expl |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
APA and Japan Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and Japan Petroleum
The main advantage of trading using opposite APA and Japan Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA position performs unexpectedly, Japan Petroleum 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 Petroleum will offset losses from the drop in Japan Petroleum's long position.The idea behind APA Corporation and Japan Petroleum Exploration 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.| Japan Petroleum vs. PetroShale | Japan Petroleum vs. Inpex Corp ADR | Japan Petroleum vs. Canacol Energy | Japan Petroleum vs. Battalion Oil Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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