Correlation Between Api Group and Kajima Corp

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

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

Diversification Opportunities for Api Group and Kajima Corp

0.22

Correlation Coefficient

Api Group  Kajima Corp

Modest diversification

The 3 months correlation between Api and Kajima is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Api Group Corp 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 Api Group 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 Api Group Corp 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 Api Group i.e., Api Group and Kajima Corp go up and down completely randomly.

Pair Corralation between Api Group and Kajima Corp

Considering the 90-day investment horizon Api Group is expected to generate 5.65 times less return on investment than Kajima Corp. But when comparing it to its historical volatility, Api Group Corp is 2.61 times less risky than Kajima Corp. It trades about 0.05 of its potential returns per unit of risk. Kajima Corp ADR is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,607  in Kajima Corp ADR on December 27, 2024 and sell it today you would earn a total of  535.00  from holding Kajima Corp ADR or generate 33.29% return on investment over 90 days.

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

Api Group Corp  vs.  Kajima Corp ADR

Api Group Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Api Group Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Api Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kajima Corp ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kajima Corp ADR are ranked lower than 9 (%) 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 Api Group and Kajima Corp

The main advantage of trading using opposite Api Group and Kajima Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Api Group 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 Api Group Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.