Correlation Between Air Transport and BANDAI NAMCO

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

By analyzing existing cross correlation between Air Transport Services and BANDAI NAMCO Holdings, you can compare the effects of market volatilities on Air Transport and BANDAI NAMCO 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 Transport with a short position of BANDAI NAMCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and BANDAI NAMCO.

Diversification Opportunities for Air Transport and BANDAI NAMCO

0.45

Correlation Coefficient

Air Transport  BANDAI NAMCO

Very weak diversification

The 3 months correlation between Air and BANDAI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and BANDAI NAMCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANDAI NAMCO Holdings and Air Transport 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 Transport Services are associated (or correlated) with BANDAI NAMCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANDAI NAMCO Holdings has no effect on the direction of Air Transport i.e., Air Transport and BANDAI NAMCO go up and down completely randomly.

Pair Corralation between Air Transport and BANDAI NAMCO

Assuming the 90 days horizon Air Transport Services is expected to generate 1.65 times more return on investment than BANDAI NAMCO. However, Air Transport is 1.65 times more volatile than BANDAI NAMCO Holdings. It trades about 0.2 of its potential returns per unit of risk. BANDAI NAMCO Holdings is currently generating about 0.08 per unit of risk. If you would invest  1,500  in Air Transport Services on October 24, 2024 and sell it today you would earn a total of  640.00  from holding Air Transport Services or generate 42.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Air Transport Services  vs.  BANDAI NAMCO Holdings

Air Transport Services

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

BANDAI NAMCO Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BANDAI NAMCO Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BANDAI NAMCO may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Air Transport and BANDAI NAMCO

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

The idea behind Air Transport Services and BANDAI NAMCO 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.