Correlation Between Japan Asia and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Japan Asia and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Japan Asia and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Volkswagen.
Diversification Opportunities for Japan Asia and Volkswagen
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Japan and Volkswagen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Japan Asia i.e., Japan Asia and Volkswagen go up and down completely randomly.
Pair Corralation between Japan Asia and Volkswagen
Assuming the 90 days horizon Japan Asia Investment is expected to under-perform the Volkswagen. In addition to that, Japan Asia is 1.15 times more volatile than Volkswagen AG. It trades about -0.15 of its total potential returns per unit of risk. Volkswagen AG is currently generating about 0.4 per unit of volatility. If you would invest 8,975 in Volkswagen AG on November 3, 2024 and sell it today you would earn a total of 1,135 from holding Volkswagen AG or generate 12.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. Volkswagen AG
Performance |
| Timeline |
| Japan Asia Investment |
| Volkswagen AG |
Japan Asia and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Volkswagen
The main advantage of trading using opposite Japan Asia and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Japan Asia vs. Geely Automobile Holdings | Japan Asia vs. betterU Education Corp | Japan Asia vs. Chengdu PUTIAN Telecommunications | Japan Asia vs. Adtalem Global Education |
| Volkswagen vs. SLR Investment Corp | Volkswagen vs. Yuexiu Transport Infrastructure | Volkswagen vs. WisdomTree Investments | Volkswagen vs. MidCap Financial Investment |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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