Correlation Between Japan Asia and Alstria Office

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

By analyzing existing cross correlation between Japan Asia Investment and alstria office REIT AG, you can compare the effects of market volatilities on Japan Asia and Alstria Office 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 Asia with a short position of Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Alstria Office.

Diversification Opportunities for Japan Asia and Alstria Office

0.0

Correlation Coefficient

Japan Asia  Alstria Office

Pay attention - limited upside

The 3 months correlation between Japan and Alstria is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and Japan Asia 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 Asia Investment are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Japan Asia i.e., Japan Asia and Alstria Office go up and down completely randomly.

Pair Corralation between Japan Asia and Alstria Office

Assuming the 90 days horizon Japan Asia Investment is expected to under-perform the Alstria Office. In addition to that, Japan Asia is 1.09 times more volatile than alstria office REIT AG. It trades about -0.01 of its total potential returns per unit of risk. alstria office REIT AG is currently generating about 0.09 per unit of volatility. If you would invest  330.00  in alstria office REIT AG on September 28, 2024 and sell it today you would earn a total of  434.00  from holding alstria office REIT AG or generate 131.52% return on investment over 90 days.

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

Japan Asia Investment  vs.  alstria office REIT AG

Japan Asia Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

alstria office REIT

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alstria Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japan Asia and Alstria Office

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

The idea behind Japan Asia Investment and alstria office REIT AG 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.