Correlation Between NAGOYA RAILROAD and JCDecaux

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

By analyzing existing cross correlation between NAGOYA RAILROAD and JCDecaux SA, you can compare the effects of market volatilities on NAGOYA RAILROAD and JCDecaux 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 NAGOYA RAILROAD with a short position of JCDecaux. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAGOYA RAILROAD and JCDecaux.

Diversification Opportunities for NAGOYA RAILROAD and JCDecaux

-0.05

Correlation Coefficient

NAGOYA RAILROAD  JCDecaux

Good diversification

The 3 months correlation between NAGOYA and JCDecaux is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding NAGOYA RAILROAD and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA and NAGOYA RAILROAD 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 NAGOYA RAILROAD are associated (or correlated) with JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of NAGOYA RAILROAD i.e., NAGOYA RAILROAD and JCDecaux go up and down completely randomly.

Pair Corralation between NAGOYA RAILROAD and JCDecaux

Assuming the 90 days horizon NAGOYA RAILROAD is expected to generate 1.8 times less return on investment than JCDecaux. But when comparing it to its historical volatility, NAGOYA RAILROAD is 1.79 times less risky than JCDecaux. It trades about 0.1 of its potential returns per unit of risk. JCDecaux SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,477  in JCDecaux SA on December 22, 2024 and sell it today you would earn a total of  200.00  from holding JCDecaux SA or generate 13.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

NAGOYA RAILROAD  vs.  JCDecaux SA

NAGOYA RAILROAD

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NAGOYA RAILROAD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NAGOYA RAILROAD may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JCDecaux SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JCDecaux SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JCDecaux reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NAGOYA RAILROAD and JCDecaux

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

The idea behind NAGOYA RAILROAD and JCDecaux SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.