Correlation Between Japan Post and KonaTel

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

Diversification Opportunities for Japan Post and KonaTel

-0.39

Correlation Coefficient

Japan Post  KonaTel

Very good diversification

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

Pair Corralation between Japan Post and KonaTel

Assuming the 90 days horizon Japan Post Holdings is expected to generate 0.02 times more return on investment than KonaTel. However, Japan Post Holdings is 43.1 times less risky than KonaTel. It trades about 0.5 of its potential returns per unit of risk. KonaTel is currently generating about -0.06 per unit of risk. If you would invest  1,032  in Japan Post Holdings on September 29, 2024 and sell it today you would earn a total of  4.00  from holding Japan Post Holdings or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.15%
Values	Daily Returns

Japan Post Holdings  vs.  KonaTel

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.

KonaTel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KonaTel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Japan Post and KonaTel

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

The idea behind Japan Post Holdings and KonaTel 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.