Correlation Between Japan Airlines and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Japan Airlines and International Consolidated 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 Airlines and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Airlines Ltd and International Consolidated Airlines, you can compare the effects of market volatilities on Japan Airlines and International Consolidated 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 Airlines with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Airlines and International Consolidated.
Diversification Opportunities for Japan Airlines and International Consolidated
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japan and International is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Japan Airlines Ltd and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Japan Airlines 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 Airlines Ltd are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Japan Airlines i.e., Japan Airlines and International Consolidated go up and down completely randomly.
Pair Corralation between Japan Airlines and International Consolidated
If you would invest 186.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 114.00 from holding International Consolidated Airlines or generate 61.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.53% |
| Values | Daily Returns |
Japan Airlines Ltd vs. International Consolidated Air
Performance |
| Timeline |
| Japan Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| International Consolidated |
Japan Airlines and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Airlines and International Consolidated
The main advantage of trading using opposite Japan Airlines and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Airlines position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Japan Airlines vs. Qantas Airways Limited | Japan Airlines vs. Cathay Pacific Airways | Japan Airlines vs. Singapore Airlines | Japan Airlines vs. Singapore Airlines |
| International Consolidated vs. Air China Limited | International Consolidated vs. Cebu Air | International Consolidated vs. Air France KLM SA | International Consolidated vs. AirAsia Group Berhad |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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