Correlation Between JAPAN AIRLINES and SANOK RUBBER

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

By analyzing existing cross correlation between JAPAN AIRLINES and SANOK RUBBER ZY, you can compare the effects of market volatilities on JAPAN AIRLINES and SANOK RUBBER 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 SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and SANOK RUBBER.

Diversification Opportunities for JAPAN AIRLINES and SANOK RUBBER

-0.39

Correlation Coefficient

JAPAN AIRLINES  SANOK RUBBER

Very good diversification

The 3 months correlation between JAPAN and SANOK is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY 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 SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and SANOK RUBBER go up and down completely randomly.

Pair Corralation between JAPAN AIRLINES and SANOK RUBBER

Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 1.57 times more return on investment than SANOK RUBBER. However, JAPAN AIRLINES is 1.57 times more volatile than SANOK RUBBER ZY. It trades about 0.13 of its potential returns per unit of risk. SANOK RUBBER ZY is currently generating about -0.04 per unit of risk. If you would invest  1,470  in JAPAN AIRLINES on August 31, 2024 and sell it today you would earn a total of  60.00  from holding JAPAN AIRLINES or generate 4.08% return on investment over 90 days.

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

JAPAN AIRLINES  vs.  SANOK RUBBER ZY

JAPAN AIRLINES

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JAPAN AIRLINES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SANOK RUBBER ZY

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JAPAN AIRLINES and SANOK RUBBER

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

The idea behind JAPAN AIRLINES and SANOK RUBBER ZY 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.