Correlation Between TRADEGATE and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both TRADEGATE 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 TRADEGATE and JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and JAPAN AIRLINES, you can compare the effects of market volatilities on TRADEGATE 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 TRADEGATE with a short position of JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and JAPAN AIRLINES.
Diversification Opportunities for TRADEGATE and JAPAN AIRLINES
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRADEGATE and JAPAN is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES and TRADEGATE 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 TRADEGATE 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 TRADEGATE i.e., TRADEGATE and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between TRADEGATE and JAPAN AIRLINES
Assuming the 90 days trading horizon TRADEGATE is expected to generate 1.18 times less return on investment than JAPAN AIRLINES. But when comparing it to its historical volatility, TRADEGATE is 2.9 times less risky than JAPAN AIRLINES. It trades about 0.18 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,620 in JAPAN AIRLINES on December 9, 2024 and sell it today you would earn a total of 30.00 from holding JAPAN AIRLINES or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRADEGATE vs. JAPAN AIRLINES
Performance |
| Timeline |
| TRADEGATE |
| JAPAN AIRLINES |
TRADEGATE and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and JAPAN AIRLINES
The main advantage of trading using opposite TRADEGATE and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE 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.| TRADEGATE vs. CHINA EDUCATION GROUP | ||
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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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