Correlation Between Japan Asia and CanSino Biologics

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

Diversification Opportunities for Japan Asia and CanSino Biologics

0.33

Correlation Coefficient

Japan Asia  CanSino Biologics

Weak diversification

The 3 months correlation between Japan and CanSino is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics 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 CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Japan Asia i.e., Japan Asia and CanSino Biologics go up and down completely randomly.

Pair Corralation between Japan Asia and CanSino Biologics

Assuming the 90 days horizon Japan Asia Investment is expected to generate 0.62 times more return on investment than CanSino Biologics. However, Japan Asia Investment is 1.6 times less risky than CanSino Biologics. It trades about -0.07 of its potential returns per unit of risk. CanSino Biologics is currently generating about -0.3 per unit of risk. If you would invest  129.00  in Japan Asia Investment on October 10, 2024 and sell it today you would lose (3.00) from holding Japan Asia Investment or give up 2.33% of portfolio value over 90 days.

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

Japan Asia Investment  vs.  CanSino Biologics

Japan Asia Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Asia Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

CanSino Biologics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CanSino Biologics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japan Asia and CanSino Biologics

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

The idea behind Japan Asia Investment and CanSino Biologics 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.