Correlation Between Air New and Janison Education

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

By analyzing existing cross correlation between Air New Zealand and Janison Education Group, you can compare the effects of market volatilities on Air New and Janison Education 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 Air New with a short position of Janison Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Janison Education.

Diversification Opportunities for Air New and Janison Education

0.44

Correlation Coefficient

Air New  Janison Education

Very weak diversification

The 3 months correlation between Air and Janison is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Janison Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janison Education and Air New 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 Air New Zealand are associated (or correlated) with Janison Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janison Education has no effect on the direction of Air New i.e., Air New and Janison Education go up and down completely randomly.

Pair Corralation between Air New and Janison Education

Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.28 times more return on investment than Janison Education. However, Air New Zealand is 3.54 times less risky than Janison Education. It trades about -0.02 of its potential returns per unit of risk. Janison Education Group is currently generating about -0.02 per unit of risk. If you would invest  60.00  in Air New Zealand on September 20, 2024 and sell it today you would lose (9.00) from holding Air New Zealand or give up 15.0% of portfolio value over 90 days.

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

Air New Zealand  vs.  Janison Education Group

Air New Zealand

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air New Zealand are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Air New is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Janison Education

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Janison Education Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Janison Education may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Air New and Janison Education

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

The idea behind Air New Zealand and Janison Education Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.