Correlation Between Globex Mining and Central Japan
Can any of the company-specific risk be diversified away by investing in both Globex Mining and Central Japan 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 Globex Mining and Central Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and Central Japan Railway, you can compare the effects of market volatilities on Globex Mining and Central Japan 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 Globex Mining with a short position of Central Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Central Japan.
Diversification Opportunities for Globex Mining and Central Japan
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Globex and Central is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Central Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Japan Railway and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Central Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Japan Railway has no effect on the direction of Globex Mining i.e., Globex Mining and Central Japan go up and down completely randomly.
Pair Corralation between Globex Mining and Central Japan
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 1.3 times more return on investment than Central Japan. However, Globex Mining is 1.3 times more volatile than Central Japan Railway. It trades about 0.6 of its potential returns per unit of risk. Central Japan Railway is currently generating about -0.17 per unit of risk. If you would invest 75.00 in Globex Mining Enterprises on October 16, 2024 and sell it today you would earn a total of 14.00 from holding Globex Mining Enterprises or generate 18.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Central Japan Railway
Performance |
| Timeline |
| Globex Mining Enterprises |
| Central Japan Railway |
Globex Mining and Central Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Central Japan
The main advantage of trading using opposite Globex Mining and Central Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, Central Japan 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 Central Japan will offset losses from the drop in Central Japan's long position.| Globex Mining vs. Apple Inc | Globex Mining vs. Apple Inc | Globex Mining vs. Apple Inc | Globex Mining vs. Apple Inc |
| Central Japan vs. GOLD ROAD RES | Central Japan vs. QUEEN S ROAD | Central Japan vs. BE Semiconductor Industries | Central Japan vs. Magnachip Semiconductor |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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