Correlation Between Japan Post and Renesas Electronics

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

By analyzing existing cross correlation between Japan Post Bank and Renesas Electronics, you can compare the effects of market volatilities on Japan Post and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Renesas Electronics.

Diversification Opportunities for Japan Post and Renesas Electronics

0.0

Correlation Coefficient

Japan Post  Renesas Electronics

Pay attention - limited upside

The 3 months correlation between Japan and Renesas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Bank and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Bank are associated (or correlated) with Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of Japan Post i.e., Japan Post and Renesas Electronics go up and down completely randomly.

Pair Corralation between Japan Post and Renesas Electronics

If you would invest  1,241  in Renesas Electronics on October 11, 2024 and sell it today you would earn a total of  74.00  from holding Renesas Electronics or generate 5.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Japan Post Bank  vs.  Renesas Electronics

Japan Post Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Post Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Post is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Renesas Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renesas Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Renesas Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Japan Post and Renesas Electronics

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

The idea behind Japan Post Bank and Renesas Electronics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.