Correlation Between Japan Asia and Sixt Leasing

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

Diversification Opportunities for Japan Asia and Sixt Leasing

-0.23

Correlation Coefficient

Japan Asia  Sixt Leasing

Very good diversification

The 3 months correlation between Japan and Sixt is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of Japan Asia i.e., Japan Asia and Sixt Leasing go up and down completely randomly.

Pair Corralation between Japan Asia and Sixt Leasing

Assuming the 90 days horizon Japan Asia Investment is expected to generate 1.22 times more return on investment than Sixt Leasing. However, Japan Asia is 1.22 times more volatile than Sixt Leasing SE. It trades about 0.17 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about 0.04 per unit of risk. If you would invest  123.00  in Japan Asia Investment on December 20, 2024 and sell it today you would earn a total of  37.00  from holding Japan Asia Investment or generate 30.08% return on investment over 90 days.

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

Japan Asia Investment  vs.  Sixt Leasing SE

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 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Japan Asia reported solid returns over the last few months and may actually be approaching a breakup point.

Sixt Leasing SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt Leasing SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sixt Leasing is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Japan Asia and Sixt Leasing

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

The idea behind Japan Asia Investment and Sixt Leasing SE 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.