Correlation Between Japan Post and Austin Engineering
Can any of the company-specific risk be diversified away by investing in both Japan Post and Austin Engineering 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 Post and Austin Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Holdings and Austin Engineering Limited, you can compare the effects of market volatilities on Japan Post and Austin Engineering 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 Post with a short position of Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Austin Engineering.
Diversification Opportunities for Japan Post and Austin Engineering
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Austin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering and Japan Post 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 Post Holdings are associated (or correlated) with Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Japan Post i.e., Japan Post and Austin Engineering go up and down completely randomly.
Pair Corralation between Japan Post and Austin Engineering
Assuming the 90 days horizon Japan Post Holdings is expected to generate 0.84 times more return on investment than Austin Engineering. However, Japan Post Holdings is 1.19 times less risky than Austin Engineering. It trades about 0.17 of its potential returns per unit of risk. Austin Engineering Limited is currently generating about 0.05 per unit of risk. If you would invest 760.00 in Japan Post Holdings on August 31, 2024 and sell it today you would earn a total of 276.00 from holding Japan Post Holdings or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 13.67% |
| Values | Daily Returns |
Japan Post Holdings vs. Austin Engineering Limited
Performance |
| Timeline |
| Japan Post Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Austin Engineering |
Japan Post and Austin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Austin Engineering
The main advantage of trading using opposite Japan Post and Austin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, Austin Engineering 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 Austin Engineering will offset losses from the drop in Austin Engineering's long position.| Japan Post vs. Huntington Bancshares Incorporated | Japan Post vs. Fifth Third Bancorp | Japan Post vs. MT Bank | Japan Post vs. Citizens Financial Group, |
| Austin Engineering vs. American Premium Water | Austin Engineering vs. AmeraMex International | Austin Engineering vs. Arts Way Manufacturing Co | Austin Engineering vs. Astec Industries |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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