Correlation Between INSURANCE AUST and Japan Post
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and Japan Post 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 INSURANCE AUST and Japan Post into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Japan Post Insurance, you can compare the effects of market volatilities on INSURANCE AUST and Japan Post 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 INSURANCE AUST with a short position of Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Japan Post.
Diversification Opportunities for INSURANCE AUST and Japan Post
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INSURANCE and Japan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Japan Post Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Insurance and INSURANCE AUST 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 INSURANCE AUST GRP are associated (or correlated) with Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Insurance has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and Japan Post go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Japan Post
Assuming the 90 days trading horizon INSURANCE AUST is expected to generate 1.8 times less return on investment than Japan Post. But when comparing it to its historical volatility, INSURANCE AUST GRP is 1.3 times less risky than Japan Post. It trades about 0.38 of its potential returns per unit of risk. Japan Post Insurance is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 1,500 in Japan Post Insurance on September 1, 2024 and sell it today you would earn a total of 460.00 from holding Japan Post Insurance or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Japan Post Insurance
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Japan Post Insurance |
INSURANCE AUST and Japan Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Japan Post
The main advantage of trading using opposite INSURANCE AUST and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST position performs unexpectedly, Japan Post 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 Post will offset losses from the drop in Japan Post's long position.| INSURANCE AUST vs. SIVERS SEMICONDUCTORS AB | INSURANCE AUST vs. Darden Restaurants | INSURANCE AUST vs. Reliance Steel Aluminum | INSURANCE AUST vs. Q2M Managementberatung AG |
| Japan Post vs. Algonquin Power Utilities | Japan Post vs. Goodyear Tire Rubber | Japan Post vs. Caseys General Stores | Japan Post vs. Materialise NV |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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