Correlation Between ACS Actividades and Kajima Corp

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

By analyzing existing cross correlation between ACS Actividades De and Kajima Corp ADR, you can compare the effects of market volatilities on ACS Actividades and Kajima Corp 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 ACS Actividades with a short position of Kajima Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACS Actividades and Kajima Corp.

Diversification Opportunities for ACS Actividades and Kajima Corp

0.49

Correlation Coefficient

ACS Actividades  Kajima Corp

Very weak diversification

The 3 months correlation between ACS and Kajima is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ACS Actividades De and Kajima Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kajima Corp ADR and ACS Actividades 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 ACS Actividades De are associated (or correlated) with Kajima Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kajima Corp ADR has no effect on the direction of ACS Actividades i.e., ACS Actividades and Kajima Corp go up and down completely randomly.

Pair Corralation between ACS Actividades and Kajima Corp

Assuming the 90 days horizon ACS Actividades is expected to generate 3.43 times less return on investment than Kajima Corp. But when comparing it to its historical volatility, ACS Actividades De is 2.55 times less risky than Kajima Corp. It trades about 0.13 of its potential returns per unit of risk. Kajima Corp ADR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,774  in Kajima Corp ADR on December 1, 2024 and sell it today you would earn a total of  336.00  from holding Kajima Corp ADR or generate 18.94% return on investment over 90 days.

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

ACS Actividades De  vs.  Kajima Corp ADR

ACS Actividades De

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades De are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ACS Actividades showed solid returns over the last few months and may actually be approaching a breakup point.

Kajima Corp ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kajima Corp ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Kajima Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACS Actividades and Kajima Corp

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

The idea behind ACS Actividades De and Kajima Corp ADR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.