Correlation Between JAPAN POST and AirAsia Group
Can any of the company-specific risk be diversified away by investing in both JAPAN POST and AirAsia Group 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 AirAsia Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN POST BANK and AirAsia Group Berhad, you can compare the effects of market volatilities on JAPAN POST and AirAsia Group 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 AirAsia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN POST and AirAsia Group.
Diversification Opportunities for JAPAN POST and AirAsia Group
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JAPAN and AirAsia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN POST BANK and AirAsia Group Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirAsia Group Berhad 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 BANK are associated (or correlated) with AirAsia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirAsia Group Berhad has no effect on the direction of JAPAN POST i.e., JAPAN POST and AirAsia Group go up and down completely randomly.
Pair Corralation between JAPAN POST and AirAsia Group
Assuming the 90 days horizon JAPAN POST BANK is expected to generate 0.46 times more return on investment than AirAsia Group. However, JAPAN POST BANK is 2.19 times less risky than AirAsia Group. It trades about 0.09 of its potential returns per unit of risk. AirAsia Group Berhad is currently generating about -0.13 per unit of risk. If you would invest 920.00 in JAPAN POST BANK on November 2, 2024 and sell it today you would earn a total of 25.00 from holding JAPAN POST BANK or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN POST BANK vs. AirAsia Group Berhad
Performance |
| Timeline |
| JAPAN POST BANK |
| AirAsia Group Berhad |
JAPAN POST and AirAsia Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN POST and AirAsia Group
The main advantage of trading using opposite JAPAN POST and AirAsia Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN POST position performs unexpectedly, AirAsia Group 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 AirAsia Group will offset losses from the drop in AirAsia Group's long position.| JAPAN POST vs. Bankinter SA ADR | JAPAN POST vs. First Horizon | JAPAN POST vs. JAPAN POST BANK | JAPAN POST vs. CaixaBank SA |
| AirAsia Group vs. Air New Zealand | AirAsia Group vs. ANA Holdings ADR | AirAsia Group vs. Cebu Air | AirAsia Group vs. Air France KLM SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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