Correlation Between REGAL HOTEL and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both REGAL HOTEL 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 REGAL HOTEL and JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL HOTEL INTL and JAPAN AIRLINES, you can compare the effects of market volatilities on REGAL HOTEL 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 REGAL HOTEL with a short position of JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL HOTEL and JAPAN AIRLINES.
Diversification Opportunities for REGAL HOTEL and JAPAN AIRLINES
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REGAL and JAPAN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding REGAL HOTEL INTL and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES and REGAL HOTEL 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 REGAL HOTEL INTL 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 REGAL HOTEL i.e., REGAL HOTEL and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between REGAL HOTEL and JAPAN AIRLINES
Assuming the 90 days trading horizon REGAL HOTEL INTL is expected to generate 2.1 times more return on investment than JAPAN AIRLINES. However, REGAL HOTEL is 2.1 times more volatile than JAPAN AIRLINES. It trades about 0.01 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.03 per unit of risk. If you would invest 30.00 in REGAL HOTEL INTL on October 11, 2024 and sell it today you would lose (1.00) from holding REGAL HOTEL INTL or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL HOTEL INTL vs. JAPAN AIRLINES
Performance |
| Timeline |
| REGAL HOTEL INTL |
| JAPAN AIRLINES |
REGAL HOTEL and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL HOTEL and JAPAN AIRLINES
The main advantage of trading using opposite REGAL HOTEL and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL HOTEL 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.| REGAL HOTEL vs. Insteel Industries | REGAL HOTEL vs. Constellation Software | REGAL HOTEL vs. Unity Software | REGAL HOTEL vs. Magic Software Enterprises |
| JAPAN AIRLINES vs. Sims Metal Management | JAPAN AIRLINES vs. Ares Management Corp | JAPAN AIRLINES vs. OBSERVE MEDICAL ASA | JAPAN AIRLINES vs. CompuGroup Medical SE |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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