Correlation Between Japan Asia and CSX

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

Diversification Opportunities for Japan Asia and CSX

0.62

Correlation Coefficient

Japan Asia  CSX

Poor diversification

The 3 months correlation between Japan and CSX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Japan Asia i.e., Japan Asia and CSX go up and down completely randomly.

Pair Corralation between Japan Asia and CSX

Assuming the 90 days horizon Japan Asia Investment is expected to generate 1.62 times more return on investment than CSX. However, Japan Asia is 1.62 times more volatile than CSX Corporation. It trades about -0.07 of its potential returns per unit of risk. CSX Corporation is currently generating about -0.21 per unit of risk. If you would invest  129.00  in Japan Asia Investment on October 8, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Japan Asia Investment  vs.  CSX Corp.

Japan Asia Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Asia Investment are ranked lower than 4 (%) 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CSX Corporation

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CSX is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Japan Asia and CSX

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

The idea behind Japan Asia Investment and CSX Corporation 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.