Correlation Between Armada Hflr and Japan Post

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

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

Diversification Opportunities for Armada Hflr and Japan Post

-0.5

Correlation Coefficient

Armada Hflr  Japan Post

Very good diversification

The 3 months correlation between Armada and Japan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr 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 Armada Hflr 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 Armada Hflr Pr 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 Armada Hflr i.e., Armada Hflr and Japan Post go up and down completely randomly.

Pair Corralation between Armada Hflr and Japan Post

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Japan Post. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.11 times less risky than Japan Post. The stock trades about -0.21 of its potential returns per unit of risk. The Japan Post Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  986.00  in Japan Post Holdings on December 27, 2024 and sell it today you would earn a total of  114.00  from holding Japan Post Holdings or generate 11.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Armada Hflr Pr  vs.  Japan Post Holdings

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Japan Post Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Post Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Japan Post may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Armada Hflr and Japan Post

The main advantage of trading using opposite Armada Hflr and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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 Armada Hflr Pr 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.