Correlation Between Japan Petroleum and PICKN PAY

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

By analyzing existing cross correlation between Japan Petroleum Exploration and PICKN PAY STORES, you can compare the effects of market volatilities on Japan Petroleum and PICKN PAY 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 Petroleum with a short position of PICKN PAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Petroleum and PICKN PAY.

Diversification Opportunities for Japan Petroleum and PICKN PAY

0.04

Correlation Coefficient

Japan Petroleum  PICKN PAY

Significant diversification

The 3 months correlation between Japan and PICKN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Japan Petroleum Exploration and PICKN PAY STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICKN PAY STORES and Japan Petroleum 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 Petroleum Exploration are associated (or correlated) with PICKN PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICKN PAY STORES has no effect on the direction of Japan Petroleum i.e., Japan Petroleum and PICKN PAY go up and down completely randomly.

Pair Corralation between Japan Petroleum and PICKN PAY

Assuming the 90 days horizon Japan Petroleum Exploration is expected to generate 0.79 times more return on investment than PICKN PAY. However, Japan Petroleum Exploration is 1.27 times less risky than PICKN PAY. It trades about 0.04 of its potential returns per unit of risk. PICKN PAY STORES is currently generating about 0.03 per unit of risk. If you would invest  685.00  in Japan Petroleum Exploration on October 6, 2024 and sell it today you would earn a total of  5.00  from holding Japan Petroleum Exploration or generate 0.73% return on investment over 90 days.

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

Japan Petroleum Exploration  vs.  PICKN PAY STORES

Japan Petroleum Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Petroleum Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PICKN PAY STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PICKN PAY STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PICKN PAY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Japan Petroleum and PICKN PAY

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

The idea behind Japan Petroleum Exploration and PICKN PAY STORES 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..