Correlation Between TOWNSQUARE MEDIA and Japan Medical

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

By analyzing existing cross correlation between TOWNSQUARE MEDIA INC and Japan Medical Dynamic, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and Japan Medical 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 TOWNSQUARE MEDIA with a short position of Japan Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and Japan Medical.

Diversification Opportunities for TOWNSQUARE MEDIA and Japan Medical

-0.01

Correlation Coefficient

TOWNSQUARE MEDIA  Japan Medical

Good diversification

The 3 months correlation between TOWNSQUARE and Japan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and Japan Medical Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Medical Dynamic and TOWNSQUARE MEDIA 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 TOWNSQUARE MEDIA INC are associated (or correlated) with Japan Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Medical Dynamic has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and Japan Medical go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and Japan Medical

Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to generate 1.12 times more return on investment than Japan Medical. However, TOWNSQUARE MEDIA is 1.12 times more volatile than Japan Medical Dynamic. It trades about -0.02 of its potential returns per unit of risk. Japan Medical Dynamic is currently generating about -0.16 per unit of risk. If you would invest  930.00  in TOWNSQUARE MEDIA INC on October 8, 2024 and sell it today you would lose (25.00) from holding TOWNSQUARE MEDIA INC or give up 2.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TOWNSQUARE MEDIA INC  vs.  Japan Medical Dynamic

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOWNSQUARE MEDIA INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TOWNSQUARE MEDIA is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Japan Medical Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Medical Dynamic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TOWNSQUARE MEDIA and Japan Medical

The main advantage of trading using opposite TOWNSQUARE MEDIA and Japan Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOWNSQUARE MEDIA position performs unexpectedly, Japan Medical 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 Medical will offset losses from the drop in Japan Medical's long position.

The idea behind TOWNSQUARE MEDIA INC and Japan Medical Dynamic 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.