Correlation Between Japan Steel and ABERFORTH SMCOS

Can any of the company-specific risk be diversified away by investing in both Japan Steel and ABERFORTH SMCOS 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 ABERFORTH SMCOS 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 ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on Japan Steel and ABERFORTH SMCOS 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 ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Steel and ABERFORTH SMCOS.

Diversification Opportunities for Japan Steel and ABERFORTH SMCOS

-0.23

Correlation Coefficient

Japan Steel  ABERFORTH SMCOS

Very good diversification

The 3 months correlation between Japan and ABERFORTH is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding The Japan Steel and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS 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 ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of Japan Steel i.e., Japan Steel and ABERFORTH SMCOS go up and down completely randomly.

Pair Corralation between Japan Steel and ABERFORTH SMCOS

Assuming the 90 days horizon The Japan Steel is expected to generate 2.73 times more return on investment than ABERFORTH SMCOS. However, Japan Steel is 2.73 times more volatile than ABERFORTH SMCOS TRLS 01. It trades about 0.06 of its potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about -0.09 per unit of risk. If you would invest  3,220  in The Japan Steel on October 24, 2024 and sell it today you would earn a total of  280.00  from holding The Japan Steel or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Japan Steel  vs.  ABERFORTH SMCOS TRLS 01

Japan Steel

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Japan Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Japan Steel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ABERFORTH SMCOS TRLS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABERFORTH SMCOS TRLS 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Japan Steel and ABERFORTH SMCOS

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

The idea behind The Japan Steel and ABERFORTH SMCOS TRLS 01 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.