Correlation Between JAPAN AIRLINES and VIENNA INSURANCE

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

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

Diversification Opportunities for JAPAN AIRLINES and VIENNA INSURANCE

0.08

Correlation Coefficient

JAPAN AIRLINES  VIENNA INSURANCE

Significant diversification

The 3 months correlation between JAPAN and VIENNA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and VIENNA INSURANCE GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIENNA INSURANCE 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 VIENNA INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIENNA INSURANCE has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and VIENNA INSURANCE go up and down completely randomly.

Pair Corralation between JAPAN AIRLINES and VIENNA INSURANCE

Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 2.37 times less return on investment than VIENNA INSURANCE. In addition to that, JAPAN AIRLINES is 1.4 times more volatile than VIENNA INSURANCE GR. It trades about 0.05 of its total potential returns per unit of risk. VIENNA INSURANCE GR is currently generating about 0.15 per unit of volatility. If you would invest  2,840  in VIENNA INSURANCE GR on October 8, 2024 and sell it today you would earn a total of  205.00  from holding VIENNA INSURANCE GR or generate 7.22% return on investment over 90 days.

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

JAPAN AIRLINES  vs.  VIENNA INSURANCE GR

JAPAN AIRLINES

Risk-Adjusted Performance

3 of 100

Insignificant

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.

VIENNA INSURANCE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VIENNA INSURANCE GR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, VIENNA INSURANCE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JAPAN AIRLINES and VIENNA INSURANCE

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

The idea behind JAPAN AIRLINES and VIENNA INSURANCE GR 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.