Correlation Between JAPAN AIRLINES and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and Aluminumof China 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 Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and Aluminum of, you can compare the effects of market volatilities on JAPAN AIRLINES and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and Aluminumof China.
Diversification Opportunities for JAPAN AIRLINES and Aluminumof China
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAPAN and Aluminumof is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and Aluminumof China go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and Aluminumof China
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to under-perform the Aluminumof China. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN AIRLINES is 2.59 times less risky than Aluminumof China. The stock trades about -0.02 of its potential returns per unit of risk. The Aluminum of is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Aluminum of on November 5, 2024 and sell it today you would earn a total of 29.00 from holding Aluminum of or generate 90.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. Aluminum of
Performance |
| Timeline |
| JAPAN AIRLINES |
| Aluminumof China |
JAPAN AIRLINES and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and Aluminumof China
The main advantage of trading using opposite JAPAN AIRLINES and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| JAPAN AIRLINES vs. East Africa Metals | JAPAN AIRLINES vs. Japan Medical Dynamic | JAPAN AIRLINES vs. GALENA MINING LTD | JAPAN AIRLINES vs. Merit Medical Systems |
| Aluminumof China vs. NORWEGIAN AIR SHUT | Aluminumof China vs. Altair Engineering | Aluminumof China vs. Corsair Gaming | Aluminumof China vs. AIR LIQUIDE ADR |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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