Correlation Between Japan Asia and Lendlease

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Can any of the company-specific risk be diversified away by investing in both Japan Asia and Lendlease 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 Lendlease 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 Lendlease Group, you can compare the effects of market volatilities on Japan Asia and Lendlease 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 Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Lendlease.

Diversification Opportunities for Japan Asia and Lendlease

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Japan and Lendlease is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group 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 Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of Japan Asia i.e., Japan Asia and Lendlease go up and down completely randomly.

Pair Corralation between Japan Asia and Lendlease

Assuming the 90 days horizon Japan Asia Investment is expected to generate 1.54 times more return on investment than Lendlease. However, Japan Asia is 1.54 times more volatile than Lendlease Group. It trades about 0.0 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.0 per unit of risk. If you would invest  155.00  in Japan Asia Investment on September 12, 2024 and sell it today you would lose (26.00) from holding Japan Asia Investment or give up 16.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Japan Asia Investment  vs.  Lendlease Group

 Performance 
       Timeline  
Japan Asia Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Japan Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Lendlease Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lendlease is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Japan Asia and Lendlease Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Japan Asia and Lendlease

The main advantage of trading using opposite Japan Asia and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease's long position.
The idea behind Japan Asia Investment and Lendlease Group 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.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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