Correlation Between Japan Asia and Cross Country
Can any of the company-specific risk be diversified away by investing in both Japan Asia and Cross Country 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 Cross Country 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 Cross Country Healthcare, you can compare the effects of market volatilities on Japan Asia and Cross Country 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 Cross Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Cross Country.
Diversification Opportunities for Japan Asia and Cross Country
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Japan and Cross is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare 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 Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of Japan Asia i.e., Japan Asia and Cross Country go up and down completely randomly.
Pair Corralation between Japan Asia and Cross Country
Assuming the 90 days horizon Japan Asia Investment is expected to under-perform the Cross Country. But the stock apears to be less risky and, when comparing its historical volatility, Japan Asia Investment is 7.87 times less risky than Cross Country. The stock trades about -0.01 of its potential returns per unit of risk. The Cross Country Healthcare is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 960.00 in Cross Country Healthcare on September 12, 2024 and sell it today you would earn a total of 750.00 from holding Cross Country Healthcare or generate 78.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Japan Asia Investment vs. Cross Country Healthcare
Performance |
| Timeline |
| Japan Asia Investment |
| Cross Country Healthcare |
Japan Asia and Cross Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Cross Country
The main advantage of trading using opposite Japan Asia and Cross Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, Cross Country 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 Cross Country will offset losses from the drop in Cross Country's long position.| Japan Asia vs. Ameriprise Financial | Japan Asia vs. Ares Management Corp | Japan Asia vs. Superior Plus Corp | Japan Asia vs. SIVERS SEMICONDUCTORS AB |
| Cross Country vs. Seven West Media | Cross Country vs. Universal Entertainment | Cross Country vs. TOWNSQUARE MEDIA INC | Cross Country vs. Goosehead Insurance |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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