Correlation Between Auburn Bancorp and Japan Post

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

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

Diversification Opportunities for Auburn Bancorp and Japan Post

-0.05

Correlation Coefficient

Auburn Bancorp  Japan Post

Good diversification

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

Pair Corralation between Auburn Bancorp and Japan Post

Given the investment horizon of 90 days Auburn Bancorp is expected to generate 0.64 times more return on investment than Japan Post. However, Auburn Bancorp is 1.56 times less risky than Japan Post. It trades about 0.06 of its potential returns per unit of risk. Japan Post Holdings is currently generating about 0.02 per unit of risk. If you would invest  846.00  in Auburn Bancorp on October 7, 2024 and sell it today you would earn a total of  54.00  from holding Auburn Bancorp or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Auburn Bancorp  vs.  Japan Post Holdings

Auburn Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Auburn Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Japan Post Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Post Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Japan Post is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Auburn Bancorp and Japan Post

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

The idea behind Auburn Bancorp and Japan Post Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.