Correlation Between Badger Infrastructure and Kajima Corp

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

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

Diversification Opportunities for Badger Infrastructure and Kajima Corp

0.47

Correlation Coefficient

Badger Infrastructure  Kajima Corp

Very weak diversification

The 3 months correlation between Badger and Kajima is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Badger Infrastructure Solution 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 Badger Infrastructure 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 Badger Infrastructure Solutions 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 Badger Infrastructure i.e., Badger Infrastructure and Kajima Corp go up and down completely randomly.

Pair Corralation between Badger Infrastructure and Kajima Corp

Assuming the 90 days horizon Badger Infrastructure is expected to generate 1.48 times less return on investment than Kajima Corp. But when comparing it to its historical volatility, Badger Infrastructure Solutions is 2.4 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 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,833  in Kajima Corp ADR on December 29, 2024 and sell it today you would earn a total of  309.00  from holding Kajima Corp ADR or generate 16.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Badger Infrastructure Solution  vs.  Kajima Corp ADR

Badger Infrastructure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Badger Infrastructure Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Badger Infrastructure reported solid returns over the last few months and may actually be approaching a breakup point.

Kajima Corp ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kajima Corp ADR are ranked lower than 6 (%) 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 Badger Infrastructure and Kajima Corp

The main advantage of trading using opposite Badger Infrastructure and Kajima Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Badger Infrastructure 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 Badger Infrastructure Solutions 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.