Correlation Between Japan Post and Tecsys

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

Diversification Opportunities for Japan Post and Tecsys

0.69

Correlation Coefficient

Japan Post  Tecsys

Poor diversification

The 3 months correlation between Japan and Tecsys is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings and Tecsys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecsys Inc 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 Tecsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecsys Inc has no effect on the direction of Japan Post i.e., Japan Post and Tecsys go up and down completely randomly.

Pair Corralation between Japan Post and Tecsys

Assuming the 90 days horizon Japan Post Holdings is expected to under-perform the Tecsys. In addition to that, Japan Post is 31.39 times more volatile than Tecsys Inc. It trades about -0.14 of its total potential returns per unit of risk. Tecsys Inc is currently generating about 0.05 per unit of volatility. If you would invest  2,200  in Tecsys Inc on October 6, 2024 and sell it today you would earn a total of  897.00  from holding Tecsys Inc or generate 40.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	37.14%
Values	Daily Returns

Japan Post Holdings  vs.  Tecsys Inc

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.

Tecsys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tecsys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tecsys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Japan Post and Tecsys

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

The idea behind Japan Post Holdings and Tecsys Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..