Correlation Between Commonwealth Japan and Guinness Atkinson

Can any of the company-specific risk be diversified away by investing in both Commonwealth Japan and Guinness Atkinson 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 Commonwealth Japan and Guinness Atkinson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commonwealth Japan Fund and Guinness Atkinson Asia, you can compare the effects of market volatilities on Commonwealth Japan and Guinness Atkinson 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 Commonwealth Japan with a short position of Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Japan and Guinness Atkinson.

Diversification Opportunities for Commonwealth Japan and Guinness Atkinson

0.31

Correlation Coefficient

Commonwealth Japan  Guinness Atkinson

Weak diversification

The 3 months correlation between Commonwealth and GUINNESS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Japan Fund and Guinness Atkinson Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asia and Commonwealth Japan 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 Commonwealth Japan Fund are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asia has no effect on the direction of Commonwealth Japan i.e., Commonwealth Japan and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Commonwealth Japan and Guinness Atkinson

Assuming the 90 days horizon Commonwealth Japan is expected to generate 28.44 times less return on investment than Guinness Atkinson. But when comparing it to its historical volatility, Commonwealth Japan Fund is 1.29 times less risky than Guinness Atkinson. It trades about 0.0 of its potential returns per unit of risk. Guinness Atkinson Asia is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,565  in Guinness Atkinson Asia on December 1, 2024 and sell it today you would earn a total of  32.00  from holding Guinness Atkinson Asia or generate 2.04% return on investment over 90 days.

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

Commonwealth Japan Fund  vs.  Guinness Atkinson Asia

Commonwealth Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commonwealth Japan Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Commonwealth Japan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guinness Atkinson Asia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guinness Atkinson Asia are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guinness Atkinson may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Commonwealth Japan and Guinness Atkinson

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

The idea behind Commonwealth Japan Fund and Guinness Atkinson Asia 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.