Correlation Between Japan Medical and KAGA EL
Can any of the company-specific risk be diversified away by investing in both Japan Medical and KAGA EL 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 Medical and KAGA EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Medical Dynamic and KAGA EL LTD, you can compare the effects of market volatilities on Japan Medical and KAGA EL 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 Medical with a short position of KAGA EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and KAGA EL.
Diversification Opportunities for Japan Medical and KAGA EL
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and KAGA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and KAGA EL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAGA EL LTD and Japan Medical 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 Medical Dynamic are associated (or correlated) with KAGA EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAGA EL LTD has no effect on the direction of Japan Medical i.e., Japan Medical and KAGA EL go up and down completely randomly.
Pair Corralation between Japan Medical and KAGA EL
Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the KAGA EL. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 1.1 times less risky than KAGA EL. The stock trades about -0.07 of its potential returns per unit of risk. The KAGA EL LTD is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,160 in KAGA EL LTD on August 28, 2024 and sell it today you would lose (510.00) from holding KAGA EL LTD or give up 23.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Japan Medical Dynamic vs. KAGA EL LTD
Performance |
| Timeline |
| Japan Medical Dynamic |
| KAGA EL LTD |
Japan Medical and KAGA EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and KAGA EL
The main advantage of trading using opposite Japan Medical and KAGA EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical position performs unexpectedly, KAGA EL 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 KAGA EL will offset losses from the drop in KAGA EL's long position.| Japan Medical vs. SIDETRADE EO 1 | Japan Medical vs. EEDUCATION ALBERT AB | Japan Medical vs. TRADEGATE | Japan Medical vs. Geely Automobile Holdings |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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