Correlation Between JAPAN AIRLINES and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and Thyssenkrupp 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 Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and thyssenkrupp AG, you can compare the effects of market volatilities on JAPAN AIRLINES and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and Thyssenkrupp.
Diversification Opportunities for JAPAN AIRLINES and Thyssenkrupp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JAPAN and Thyssenkrupp is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and Thyssenkrupp go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and Thyssenkrupp
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 58.28 times less return on investment than Thyssenkrupp. But when comparing it to its historical volatility, JAPAN AIRLINES is 2.7 times less risky than Thyssenkrupp. It trades about 0.0 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 366.00 in thyssenkrupp AG on September 28, 2024 and sell it today you would earn a total of 18.00 from holding thyssenkrupp AG or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. thyssenkrupp AG
Performance |
| Timeline |
| JAPAN AIRLINES |
| thyssenkrupp AG |
JAPAN AIRLINES and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and Thyssenkrupp
The main advantage of trading using opposite JAPAN AIRLINES and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.The idea behind JAPAN AIRLINES and thyssenkrupp AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Thyssenkrupp vs. Allegheny Technologies Incorporated | Thyssenkrupp vs. China International Marine | Thyssenkrupp vs. thyssenkrupp AG | Thyssenkrupp vs. thyssenkrupp AG |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |