Correlation Between TROPHY GAMES and JAPAN AIRLINES

Can any of the company-specific risk be diversified away by investing in both TROPHY GAMES 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 TROPHY GAMES and JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TROPHY GAMES DEV and JAPAN AIRLINES, you can compare the effects of market volatilities on TROPHY GAMES 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 TROPHY GAMES with a short position of JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of TROPHY GAMES and JAPAN AIRLINES.

Diversification Opportunities for TROPHY GAMES and JAPAN AIRLINES

0.04

Correlation Coefficient

TROPHY GAMES  JAPAN AIRLINES

Significant diversification

The 3 months correlation between TROPHY and JAPAN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding TROPHY GAMES DEV and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES and TROPHY GAMES 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 TROPHY GAMES DEV 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 TROPHY GAMES i.e., TROPHY GAMES and JAPAN AIRLINES go up and down completely randomly.

Pair Corralation between TROPHY GAMES and JAPAN AIRLINES

Assuming the 90 days horizon TROPHY GAMES DEV is expected to under-perform the JAPAN AIRLINES. In addition to that, TROPHY GAMES is 2.73 times more volatile than JAPAN AIRLINES. It trades about -0.05 of its total potential returns per unit of risk. JAPAN AIRLINES is currently generating about 0.35 per unit of volatility. If you would invest  1,470  in JAPAN AIRLINES on September 12, 2024 and sell it today you would earn a total of  130.00  from holding JAPAN AIRLINES or generate 8.84% return on investment over 90 days.

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

TROPHY GAMES DEV  vs.  JAPAN AIRLINES

TROPHY GAMES DEV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TROPHY GAMES DEV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

JAPAN AIRLINES

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JAPAN AIRLINES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TROPHY GAMES and JAPAN AIRLINES

The main advantage of trading using opposite TROPHY GAMES and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TROPHY GAMES 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.

The idea behind TROPHY GAMES DEV and JAPAN AIRLINES 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.