Correlation Between Bowman Consulting and Kajima Corp

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

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

Diversification Opportunities for Bowman Consulting and Kajima Corp

-0.71

Correlation Coefficient

Bowman Consulting  Kajima Corp

Pay attention - limited upside

The 3 months correlation between Bowman and Kajima is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bowman Consulting Group 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 Bowman Consulting 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 Bowman Consulting Group 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 Bowman Consulting i.e., Bowman Consulting and Kajima Corp go up and down completely randomly.

Pair Corralation between Bowman Consulting and Kajima Corp

Given the investment horizon of 90 days Bowman Consulting Group is expected to under-perform the Kajima Corp. But the stock apears to be less risky and, when comparing its historical volatility, Bowman Consulting Group is 1.4 times less risky than Kajima Corp. The stock trades about -0.04 of its potential returns per unit of risk. The 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bowman Consulting Group  vs.  Kajima Corp ADR

Bowman Consulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowman Consulting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 Bowman Consulting and Kajima Corp

The main advantage of trading using opposite Bowman Consulting and Kajima Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowman Consulting 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 Bowman Consulting Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.