Correlation Between JAPAN AIRLINES and Stanley Electric
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and Stanley Electric 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 Stanley Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and Stanley Electric Co, you can compare the effects of market volatilities on JAPAN AIRLINES and Stanley Electric 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 Stanley Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and Stanley Electric.
Diversification Opportunities for JAPAN AIRLINES and Stanley Electric
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAPAN and Stanley is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and Stanley Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Electric 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 Stanley Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Electric has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and Stanley Electric go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and Stanley Electric
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 0.75 times more return on investment than Stanley Electric. However, JAPAN AIRLINES is 1.33 times less risky than Stanley Electric. It trades about 0.28 of its potential returns per unit of risk. Stanley Electric Co is currently generating about 0.03 per unit of risk. If you would invest 1,480 in JAPAN AIRLINES on September 20, 2024 and sell it today you would earn a total of 100.00 from holding JAPAN AIRLINES or generate 6.76% 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. Stanley Electric Co
Performance |
| Timeline |
| JAPAN AIRLINES |
| Stanley Electric |
JAPAN AIRLINES and Stanley Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and Stanley Electric
The main advantage of trading using opposite JAPAN AIRLINES and Stanley Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES position performs unexpectedly, Stanley Electric 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 Stanley Electric will offset losses from the drop in Stanley Electric's long position.| JAPAN AIRLINES vs. DeVry Education Group | JAPAN AIRLINES vs. Grand Canyon Education | JAPAN AIRLINES vs. TAL Education Group | JAPAN AIRLINES vs. Corporate Office Properties |
| Stanley Electric vs. MGIC INVESTMENT | Stanley Electric vs. JAPAN AIRLINES | Stanley Electric vs. WisdomTree Investments | Stanley Electric vs. Nok Airlines PCL |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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