Correlation Between MULTI CHEM and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both MULTI CHEM and JAPAN AIRLINES 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 MULTI CHEM and JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MULTI CHEM LTD and JAPAN AIRLINES, you can compare the effects of market volatilities on MULTI CHEM and JAPAN AIRLINES 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 MULTI CHEM with a short position of JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI CHEM and JAPAN AIRLINES.
Diversification Opportunities for MULTI CHEM and JAPAN AIRLINES
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between MULTI and JAPAN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding MULTI CHEM LTD and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES and MULTI CHEM 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 MULTI CHEM LTD are associated (or correlated) with JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of MULTI CHEM i.e., MULTI CHEM and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between MULTI CHEM and JAPAN AIRLINES
Assuming the 90 days trading horizon MULTI CHEM is expected to generate 1.31 times less return on investment than JAPAN AIRLINES. In addition to that, MULTI CHEM is 2.18 times more volatile than JAPAN AIRLINES. It trades about 0.06 of its total potential returns per unit of risk. JAPAN AIRLINES is currently generating about 0.18 per unit of volatility. If you would invest 1,480 in JAPAN AIRLINES on September 3, 2024 and sell it today you would earn a total of 80.00 from holding JAPAN AIRLINES or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MULTI CHEM LTD vs. JAPAN AIRLINES
Performance |
| Timeline |
| MULTI CHEM LTD |
| JAPAN AIRLINES |
MULTI CHEM and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MULTI CHEM and JAPAN AIRLINES
The main advantage of trading using opposite MULTI CHEM and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MULTI CHEM position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| MULTI CHEM vs. Goosehead Insurance | MULTI CHEM vs. Lion One Metals | MULTI CHEM vs. LIFENET INSURANCE CO | MULTI CHEM vs. GALENA MINING LTD |
| JAPAN AIRLINES vs. Park Hotels Resorts | JAPAN AIRLINES vs. Wyndham Hotels Resorts | JAPAN AIRLINES vs. ORMAT TECHNOLOGIES | JAPAN AIRLINES vs. RCM TECHNOLOGIES |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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