Correlation Between Japan Steel and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both Japan Steel and Graham Holdings 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 Japan Steel and Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Japan Steel and Graham Holdings Co, you can compare the effects of market volatilities on Japan Steel and Graham Holdings 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 Japan Steel with a short position of Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Steel and Graham Holdings.
Diversification Opportunities for Japan Steel and Graham Holdings
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Graham is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Japan Steel and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and Japan Steel 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 The Japan Steel are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of Japan Steel i.e., Japan Steel and Graham Holdings go up and down completely randomly.
Pair Corralation between Japan Steel and Graham Holdings
Assuming the 90 days horizon Japan Steel is expected to generate 5.35 times less return on investment than Graham Holdings. In addition to that, Japan Steel is 1.73 times more volatile than Graham Holdings Co. It trades about 0.01 of its total potential returns per unit of risk. Graham Holdings Co is currently generating about 0.1 per unit of volatility. If you would invest 84,000 in Graham Holdings Co on October 29, 2024 and sell it today you would earn a total of 2,000 from holding Graham Holdings Co or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
The Japan Steel vs. Graham Holdings Co
Performance |
| Timeline |
| Japan Steel |
| Graham Holdings |
Japan Steel and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Steel and Graham Holdings
The main advantage of trading using opposite Japan Steel and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Steel position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.| Japan Steel vs. China Datang | Japan Steel vs. Cass Information Systems | Japan Steel vs. SILVER BULLET DATA | Japan Steel vs. FUYO GENERAL LEASE |
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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 Correlations module to find global opportunities by holding instruments from different markets.
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