Correlation Between Japan Asia and Air Transport
Can any of the company-specific risk be diversified away by investing in both Japan Asia and Air Transport 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 Air Transport 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 Air Transport Services, you can compare the effects of market volatilities on Japan Asia and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Air Transport.
Diversification Opportunities for Japan Asia and Air Transport
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Japan and Air is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Japan Asia i.e., Japan Asia and Air Transport go up and down completely randomly.
Pair Corralation between Japan Asia and Air Transport
Assuming the 90 days horizon Japan Asia Investment is expected to under-perform the Air Transport. In addition to that, Japan Asia is 3.93 times more volatile than Air Transport Services. It trades about -0.09 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.24 per unit of volatility. If you would invest 2,080 in Air Transport Services on October 13, 2024 and sell it today you would earn a total of 40.00 from holding Air Transport Services or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. Air Transport Services
Performance |
| Timeline |
| Japan Asia Investment |
| Air Transport Services |
Japan Asia and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Air Transport
The main advantage of trading using opposite Japan Asia and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Japan Asia vs. SPORTING | Japan Asia vs. H2O Retailing | Japan Asia vs. Fukuyama Transporting Co | Japan Asia vs. SIDETRADE EO 1 |
| Air Transport vs. GREENX METALS LTD | Air Transport vs. Japan Asia Investment | Air Transport vs. AOYAMA TRADING | Air Transport vs. Transport International Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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