Correlation Between Japan Airlines and Vale SA
Can any of the company-specific risk be diversified away by investing in both Japan Airlines and Vale SA 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 Vale SA 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 Vale SA ADR, you can compare the effects of market volatilities on Japan Airlines and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Airlines and Vale SA.
Diversification Opportunities for Japan Airlines and Vale SA
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Vale is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Japan Airlines Ltd and Vale SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA ADR 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA ADR has no effect on the direction of Japan Airlines i.e., Japan Airlines and Vale SA go up and down completely randomly.
Pair Corralation between Japan Airlines and Vale SA
If you would invest 1,089 in Japan Airlines Ltd on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Japan Airlines Ltd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
Japan Airlines Ltd vs. Vale SA ADR
Performance |
| Timeline |
| Japan Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vale SA ADR |
Japan Airlines and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Airlines and Vale SA
The main advantage of trading using opposite Japan Airlines and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Airlines position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA'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 |
| Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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