Correlation Between JAPAN AIRLINES and REDSUN PROPERTIES

Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and REDSUN PROPERTIES 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 AIRLINES and REDSUN PROPERTIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JAPAN AIRLINES and REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on JAPAN AIRLINES and REDSUN PROPERTIES 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 AIRLINES with a short position of REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and REDSUN PROPERTIES.

Diversification Opportunities for JAPAN AIRLINES and REDSUN PROPERTIES

-0.14

Correlation Coefficient

JAPAN AIRLINES  REDSUN PROPERTIES

Good diversification

The 3 months correlation between JAPAN and REDSUN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES and JAPAN AIRLINES 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 JAPAN AIRLINES are associated (or correlated) with REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and REDSUN PROPERTIES go up and down completely randomly.

Pair Corralation between JAPAN AIRLINES and REDSUN PROPERTIES

Assuming the 90 days trading horizon JAPAN AIRLINES is expected to under-perform the REDSUN PROPERTIES. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN AIRLINES is 24.69 times less risky than REDSUN PROPERTIES. The stock trades about -0.05 of its potential returns per unit of risk. The REDSUN PROPERTIES GROUP is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.00  in REDSUN PROPERTIES GROUP on October 3, 2024 and sell it today you would lose (0.70) from holding REDSUN PROPERTIES GROUP or give up 70.0% of portfolio value over 90 days.

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

JAPAN AIRLINES  vs.  REDSUN PROPERTIES GROUP

JAPAN AIRLINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JAPAN AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, JAPAN AIRLINES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

REDSUN PROPERTIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REDSUN PROPERTIES GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with JAPAN AIRLINES and REDSUN PROPERTIES

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

The idea behind JAPAN AIRLINES and REDSUN PROPERTIES 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.