Correlation Between Japan Asia and FORTEC Elektronik

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

Diversification Opportunities for Japan Asia and FORTEC Elektronik

-0.53

Correlation Coefficient

Japan Asia  FORTEC Elektronik

Excellent diversification

The 3 months correlation between Japan and FORTEC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and FORTEC Elektronik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTEC Elektronik 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 FORTEC Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORTEC Elektronik has no effect on the direction of Japan Asia i.e., Japan Asia and FORTEC Elektronik go up and down completely randomly.

Pair Corralation between Japan Asia and FORTEC Elektronik

Assuming the 90 days horizon Japan Asia Investment is expected to generate 0.62 times more return on investment than FORTEC Elektronik. However, Japan Asia Investment is 1.61 times less risky than FORTEC Elektronik. It trades about 0.18 of its potential returns per unit of risk. FORTEC Elektronik AG is currently generating about -0.03 per unit of risk. If you would invest  122.00  in Japan Asia Investment on December 23, 2024 and sell it today you would earn a total of  40.00  from holding Japan Asia Investment or generate 32.79% return on investment over 90 days.

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

Japan Asia Investment  vs.  FORTEC Elektronik AG

Japan Asia Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Asia Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Japan Asia reported solid returns over the last few months and may actually be approaching a breakup point.

FORTEC Elektronik

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORTEC Elektronik AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Japan Asia and FORTEC Elektronik

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

The idea behind Japan Asia Investment and FORTEC Elektronik 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.