Correlation Between Japan Asia and NN Group
Can any of the company-specific risk be diversified away by investing in both Japan Asia and NN Group 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 Asia and NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and NN Group NV, you can compare the effects of market volatilities on Japan Asia and NN Group 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 Asia with a short position of NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and NN Group.
Diversification Opportunities for Japan Asia and NN Group
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and 2NN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Japan Asia 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 Asia Investment are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Japan Asia i.e., Japan Asia and NN Group go up and down completely randomly.
Pair Corralation between Japan Asia and NN Group
Assuming the 90 days horizon Japan Asia Investment is expected to generate 1.94 times more return on investment than NN Group. However, Japan Asia is 1.94 times more volatile than NN Group NV. It trades about -0.04 of its potential returns per unit of risk. NN Group NV is currently generating about -0.15 per unit of risk. If you would invest 130.00 in Japan Asia Investment on October 9, 2024 and sell it today you would lose (4.00) from holding Japan Asia Investment or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.37% |
| Values | Daily Returns |
Japan Asia Investment vs. NN Group NV
Performance |
| Timeline |
| Japan Asia Investment |
| NN Group NV |
Japan Asia and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and NN Group
The main advantage of trading using opposite Japan Asia and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.| Japan Asia vs. BC IRON | Japan Asia vs. RELIANCE STEEL AL | Japan Asia vs. KENEDIX OFFICE INV | Japan Asia vs. Focus Home Interactive |
| NN Group vs. Forsys Metals Corp | NN Group vs. Yuexiu Transport Infrastructure | NN Group vs. Fortescue Metals Group | NN Group vs. Ross Stores |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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