Correlation Between Japan Medical and LION ONE
Can any of the company-specific risk be diversified away by investing in both Japan Medical and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on Japan Medical and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and LION ONE.
Diversification Opportunities for Japan Medical and LION ONE
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and LION is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Japan Medical i.e., Japan Medical and LION ONE go up and down completely randomly.
Pair Corralation between Japan Medical and LION ONE
Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the LION ONE. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 2.58 times less risky than LION ONE. The stock trades about -0.07 of its potential returns per unit of risk. The LION ONE METALS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 55.00 in LION ONE METALS on December 7, 2024 and sell it today you would lose (36.00) from holding LION ONE METALS or give up 65.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Japan Medical Dynamic vs. LION ONE METALS
Performance |
| Timeline |
| Japan Medical Dynamic |
| LION ONE METALS |
Japan Medical and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and LION ONE
The main advantage of trading using opposite Japan Medical and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Japan Medical vs. SBI Insurance Group | Japan Medical vs. Tsingtao Brewery | Japan Medical vs. Ping An Insurance | Japan Medical vs. Direct Line Insurance |
| LION ONE vs. Globe Trade Centre | LION ONE vs. GOME Retail Holdings | LION ONE vs. FLOW TRADERS LTD | LION ONE vs. Cleanaway Waste Management |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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