Correlation Between Japan Medical and LANSON-BCC INH

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

By analyzing existing cross correlation between Japan Medical Dynamic and LANSON BCC INH EO, you can compare the effects of market volatilities on Japan Medical and LANSON-BCC INH 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 Medical with a short position of LANSON-BCC INH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and LANSON-BCC INH.

Diversification Opportunities for Japan Medical and LANSON-BCC INH

0.39

Correlation Coefficient

Japan Medical  LANSON-BCC INH

Weak diversification

The 3 months correlation between Japan and LANSON-BCC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and LANSON BCC INH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANSON BCC INH and Japan Medical 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 Medical Dynamic are associated (or correlated) with LANSON-BCC INH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANSON BCC INH has no effect on the direction of Japan Medical i.e., Japan Medical and LANSON-BCC INH go up and down completely randomly.

Pair Corralation between Japan Medical and LANSON-BCC INH

Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the LANSON-BCC INH. In addition to that, Japan Medical is 1.12 times more volatile than LANSON BCC INH EO. It trades about -0.16 of its total potential returns per unit of risk. LANSON BCC INH EO is currently generating about -0.15 per unit of volatility. If you would invest  3,970  in LANSON BCC INH EO on October 8, 2024 and sell it today you would lose (500.00) from holding LANSON BCC INH EO or give up 12.59% of portfolio value over 90 days.

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

Japan Medical Dynamic  vs.  LANSON BCC INH EO

Japan Medical Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Medical Dynamic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Japan Medical and LANSON-BCC INH

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

The idea behind Japan Medical Dynamic and LANSON BCC INH EO 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..