Correlation Between Japan Post and InsuraGuest Technologies

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

By analyzing existing cross correlation between Japan Post Holdings and InsuraGuest Technologies, you can compare the effects of market volatilities on Japan Post and InsuraGuest Technologies 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 Post with a short position of InsuraGuest Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and InsuraGuest Technologies.

Diversification Opportunities for Japan Post and InsuraGuest Technologies

-0.59

Correlation Coefficient

Japan Post  InsuraGuest Technologies

Excellent diversification

The 3 months correlation between Japan and InsuraGuest is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings and InsuraGuest Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InsuraGuest Technologies and Japan Post 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 Post Holdings are associated (or correlated) with InsuraGuest Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InsuraGuest Technologies has no effect on the direction of Japan Post i.e., Japan Post and InsuraGuest Technologies go up and down completely randomly.

Pair Corralation between Japan Post and InsuraGuest Technologies

Assuming the 90 days horizon Japan Post Holdings is expected to generate 0.51 times more return on investment than InsuraGuest Technologies. However, Japan Post Holdings is 1.95 times less risky than InsuraGuest Technologies. It trades about 0.22 of its potential returns per unit of risk. InsuraGuest Technologies is currently generating about 0.09 per unit of risk. If you would invest  868.00  in Japan Post Holdings on October 5, 2024 and sell it today you would earn a total of  168.00  from holding Japan Post Holdings or generate 19.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.58%
Values	Daily Returns

Japan Post Holdings  vs.  InsuraGuest Technologies

Japan Post Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

InsuraGuest Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InsuraGuest Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, InsuraGuest Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japan Post and InsuraGuest Technologies

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

The idea behind Japan Post Holdings and InsuraGuest Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.