Correlation Between Japan Real and Air Products
Can any of the company-specific risk be diversified away by investing in both Japan Real and Air Products 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 Real and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Real Estate and Air Products and, you can compare the effects of market volatilities on Japan Real and Air Products 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 Real with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Real and Air Products.
Diversification Opportunities for Japan Real and Air Products
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Japan and Air is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Japan Real Estate and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Japan Real 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 Real Estate are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Japan Real i.e., Japan Real and Air Products go up and down completely randomly.
Pair Corralation between Japan Real and Air Products
Assuming the 90 days horizon Japan Real is expected to generate 1.79 times less return on investment than Air Products. But when comparing it to its historical volatility, Japan Real Estate is 1.73 times less risky than Air Products. It trades about 0.05 of its potential returns per unit of risk. Air Products and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30,500 in Air Products and on August 24, 2024 and sell it today you would earn a total of 610.00 from holding Air Products and or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Real Estate vs. Air Products and
Performance |
| Timeline |
| Japan Real Estate |
| Air Products |
Japan Real and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Real and Air Products
The main advantage of trading using opposite Japan Real and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Real position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Japan Real vs. Superior Plus Corp | Japan Real vs. NMI Holdings | Japan Real vs. Origin Agritech | Japan Real vs. SIVERS SEMICONDUCTORS AB |
| Air Products vs. Sociedad Qumica y | Air Products vs. Superior Plus Corp | Air Products vs. NMI Holdings | Air Products vs. Origin Agritech |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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