Correlation Between Anheuser Busch and Japan Post

Can any of the company-specific risk be diversified away by investing in both Anheuser Busch 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 Anheuser Busch and Japan Post into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anheuser Busch InBev SANV and Japan Post Insurance, you can compare the effects of market volatilities on Anheuser Busch 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 Anheuser Busch with a short position of Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Japan Post.

Diversification Opportunities for Anheuser Busch and Japan Post

0.39

Correlation Coefficient

Anheuser Busch  Japan Post

Weak diversification

The 3 months correlation between Anheuser and Japan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV 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 Anheuser Busch 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 Anheuser Busch InBev SANV 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 Anheuser Busch i.e., Anheuser Busch and Japan Post go up and down completely randomly.

Pair Corralation between Anheuser Busch and Japan Post

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to generate 1.29 times more return on investment than Japan Post. However, Anheuser Busch is 1.29 times more volatile than Japan Post Insurance. It trades about 0.13 of its potential returns per unit of risk. Japan Post Insurance is currently generating about -0.1 per unit of risk. If you would invest  5,100  in Anheuser Busch InBev SANV on December 2, 2024 and sell it today you would earn a total of  670.00  from holding Anheuser Busch InBev SANV or generate 13.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Anheuser Busch InBev SANV  vs.  Japan Post Insurance

Anheuser Busch InBev

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Anheuser Busch sustained solid returns over the last few months and may actually be approaching a breakup point.

Japan Post Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Post Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Anheuser Busch and Japan Post

The main advantage of trading using opposite Anheuser Busch and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch 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.

The idea behind Anheuser Busch InBev SANV and Japan Post Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.