Correlation Between BII Railway and Mizuho Financial

Can any of the company-specific risk be diversified away by investing in both BII Railway and Mizuho Financial 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 BII Railway and Mizuho Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BII Railway Transportation and Mizuho Financial Group, you can compare the effects of market volatilities on BII Railway and Mizuho Financial 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 BII Railway with a short position of Mizuho Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Mizuho Financial.

Diversification Opportunities for BII Railway and Mizuho Financial

-0.21

Correlation Coefficient

BII Railway  Mizuho Financial

Very good diversification

The 3 months correlation between BII and Mizuho is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Mizuho Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuho Financial and BII Railway 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 BII Railway Transportation are associated (or correlated) with Mizuho Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuho Financial has no effect on the direction of BII Railway i.e., BII Railway and Mizuho Financial go up and down completely randomly.

Pair Corralation between BII Railway and Mizuho Financial

Assuming the 90 days horizon BII Railway is expected to generate 10.97 times less return on investment than Mizuho Financial. In addition to that, BII Railway is 1.8 times more volatile than Mizuho Financial Group. It trades about 0.0 of its total potential returns per unit of risk. Mizuho Financial Group is currently generating about 0.07 per unit of volatility. If you would invest  254.00  in Mizuho Financial Group on October 24, 2024 and sell it today you would earn a total of  226.00  from holding Mizuho Financial Group or generate 88.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BII Railway Transportation  vs.  Mizuho Financial Group

BII Railway Transpor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BII Railway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mizuho Financial

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Mizuho Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BII Railway and Mizuho Financial

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

The idea behind BII Railway Transportation and Mizuho Financial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.