Correlation Between Japan Steel and Aya Gold

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

By analyzing existing cross correlation between The Japan Steel and Aya Gold Silver, you can compare the effects of market volatilities on Japan Steel and Aya Gold 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 Japan Steel with a short position of Aya Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Steel and Aya Gold.

Diversification Opportunities for Japan Steel and Aya Gold

0.22

Correlation Coefficient

Japan Steel  Aya Gold

Modest diversification

The 3 months correlation between Japan and Aya is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Japan Steel and Aya Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aya Gold Silver and Japan Steel 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 The Japan Steel are associated (or correlated) with Aya Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aya Gold Silver has no effect on the direction of Japan Steel i.e., Japan Steel and Aya Gold go up and down completely randomly.

Pair Corralation between Japan Steel and Aya Gold

Assuming the 90 days horizon Japan Steel is expected to generate 2.02 times less return on investment than Aya Gold. In addition to that, Japan Steel is 1.03 times more volatile than Aya Gold Silver. It trades about 0.01 of its total potential returns per unit of risk. Aya Gold Silver is currently generating about 0.01 per unit of volatility. If you would invest  789.00  in Aya Gold Silver on December 19, 2024 and sell it today you would lose (12.00) from holding Aya Gold Silver or give up 1.52% of portfolio value over 90 days.

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

The Japan Steel  vs.  Aya Gold Silver

Japan Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Japan Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aya Gold Silver

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aya Gold Silver are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Aya Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Japan Steel and Aya Gold

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

The idea behind The Japan Steel and Aya Gold Silver 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.