Correlation Between JAPAN AIRLINES and H FARM
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and H FARM 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 AIRLINES and H FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and H FARM SPA, you can compare the effects of market volatilities on JAPAN AIRLINES and H FARM 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 AIRLINES with a short position of H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and H FARM.
Diversification Opportunities for JAPAN AIRLINES and H FARM
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JAPAN and 5JQ is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA and JAPAN AIRLINES 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 JAPAN AIRLINES are associated (or correlated) with H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and H FARM go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and H FARM
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to under-perform the H FARM. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN AIRLINES is 11.36 times less risky than H FARM. The stock trades about -0.03 of its potential returns per unit of risk. The H FARM SPA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12.00 in H FARM SPA on October 28, 2024 and sell it today you would earn a total of 0.00 from holding H FARM SPA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. H FARM SPA
Performance |
| Timeline |
| JAPAN AIRLINES |
| H FARM SPA |
JAPAN AIRLINES and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and H FARM
The main advantage of trading using opposite JAPAN AIRLINES and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| JAPAN AIRLINES vs. CHAMPION IRON | JAPAN AIRLINES vs. NEW MILLENNIUM IRON | JAPAN AIRLINES vs. RELIANCE STEEL AL | JAPAN AIRLINES vs. MOUNT GIBSON IRON |
| H FARM vs. GOLD ROAD RES | H FARM vs. Iridium Communications | H FARM vs. Gaztransport Technigaz SA | H FARM vs. Air Transport Services |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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