Correlation Between JAPAN AIRLINES and EMPEROR ENT
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and EMPEROR ENT 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 EMPEROR ENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and EMPEROR ENT HOTEL, you can compare the effects of market volatilities on JAPAN AIRLINES and EMPEROR ENT 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 EMPEROR ENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and EMPEROR ENT.
Diversification Opportunities for JAPAN AIRLINES and EMPEROR ENT
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JAPAN and EMPEROR is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and EMPEROR ENT HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPEROR ENT HOTEL 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 EMPEROR ENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPEROR ENT HOTEL has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and EMPEROR ENT go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and EMPEROR ENT
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to under-perform the EMPEROR ENT. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN AIRLINES is 7.27 times less risky than EMPEROR ENT. The stock trades about -0.05 of its potential returns per unit of risk. The EMPEROR ENT HOTEL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.40 in EMPEROR ENT HOTEL on October 12, 2024 and sell it today you would earn a total of 1.10 from holding EMPEROR ENT HOTEL or generate 45.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. EMPEROR ENT HOTEL
Performance |
| Timeline |
| JAPAN AIRLINES |
| EMPEROR ENT HOTEL |
JAPAN AIRLINES and EMPEROR ENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and EMPEROR ENT
The main advantage of trading using opposite JAPAN AIRLINES and EMPEROR ENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES position performs unexpectedly, EMPEROR ENT 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 EMPEROR ENT will offset losses from the drop in EMPEROR ENT's long position.| JAPAN AIRLINES vs. National Beverage Corp | JAPAN AIRLINES vs. INDOFOOD AGRI RES | JAPAN AIRLINES vs. GRIFFIN MINING LTD | JAPAN AIRLINES vs. VIVA WINE GROUP |
| EMPEROR ENT vs. PURETECH HEALTH PLC | EMPEROR ENT vs. Planet Fitness | EMPEROR ENT vs. Acadia Healthcare | EMPEROR ENT vs. AXWAY SOFTWARE EO |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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