Correlation Between Qantas Airways and Japan Airlines
Can any of the company-specific risk be diversified away by investing in both Qantas Airways 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 Qantas Airways and Japan Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qantas Airways Ltd and Japan Airlines Ltd, you can compare the effects of market volatilities on Qantas Airways 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 Qantas Airways with a short position of Japan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qantas Airways and Japan Airlines.
Diversification Opportunities for Qantas Airways and Japan Airlines
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Qantas and Japan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Ltd and Japan Airlines Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Airlines and Qantas Airways 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 Qantas Airways 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 Qantas Airways i.e., Qantas Airways and Japan Airlines go up and down completely randomly.
Pair Corralation between Qantas Airways and Japan Airlines
If you would invest 1,669 in Qantas Airways Ltd on August 25, 2024 and sell it today you would earn a total of 1,271 from holding Qantas Airways Ltd or generate 76.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.53% |
| Values | Daily Returns |
Qantas Airways Ltd vs. Japan Airlines Ltd
Performance |
| Timeline |
| Qantas Airways |
| Japan Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Qantas Airways and Japan Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qantas Airways and Japan Airlines
The main advantage of trading using opposite Qantas Airways and Japan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways 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' long position.| Qantas Airways vs. Air China Limited | Qantas Airways vs. Cebu Air | Qantas Airways vs. Air France KLM SA | Qantas Airways vs. AirAsia Group Berhad |
| Japan Airlines vs. Qantas Airways Limited | Japan Airlines vs. Cathay Pacific Airways | Japan Airlines vs. Singapore Airlines | Japan Airlines vs. Singapore Airlines |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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