Correlation Between Japan Post and Amazon

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

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

Diversification Opportunities for Japan Post and Amazon

-0.4

Correlation Coefficient

Japan Post  Amazon

Very good diversification

The 3 months correlation between Japan and Amazon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Japan Post 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 Japan Post Insurance are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Japan Post i.e., Japan Post and Amazon go up and down completely randomly.

Pair Corralation between Japan Post and Amazon

Assuming the 90 days trading horizon Japan Post Insurance is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, Japan Post Insurance is 1.31 times less risky than Amazon. The stock trades about -0.1 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  20,165  in Amazon Inc on December 1, 2024 and sell it today you would earn a total of  15.00  from holding Amazon Inc or generate 0.07% return on investment over 90 days.

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

Japan Post Insurance  vs.  Amazon Inc

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 uncertain 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.

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amazon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Japan Post and Amazon

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

The idea behind Japan Post Insurance and Amazon Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.