Correlation Between JAPAN POST and Capitalworks Emerging

Can any of the company-specific risk be diversified away by investing in both JAPAN POST and Capitalworks Emerging 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 Capitalworks Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JAPAN POST BANK and Capitalworks Emerging Markets, you can compare the effects of market volatilities on JAPAN POST and Capitalworks Emerging 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 Capitalworks Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN POST and Capitalworks Emerging.

Diversification Opportunities for JAPAN POST and Capitalworks Emerging

-0.61

Correlation Coefficient

JAPAN POST  Capitalworks Emerging

Excellent diversification

The 3 months correlation between JAPAN and Capitalworks is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN POST BANK and Capitalworks Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitalworks Emerging 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 BANK are associated (or correlated) with Capitalworks Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitalworks Emerging has no effect on the direction of JAPAN POST i.e., JAPAN POST and Capitalworks Emerging go up and down completely randomly.

Pair Corralation between JAPAN POST and Capitalworks Emerging

If you would invest  926.00  in JAPAN POST BANK on September 13, 2024 and sell it today you would earn a total of  9.00  from holding JAPAN POST BANK or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

JAPAN POST BANK  vs.  Capitalworks Emerging Markets

JAPAN POST BANK

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN POST BANK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JAPAN POST is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Capitalworks Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capitalworks Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Capitalworks Emerging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JAPAN POST and Capitalworks Emerging

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

The idea behind JAPAN POST BANK and Capitalworks Emerging Markets 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 Commodity Directory module to find actively traded commodities issued by global exchanges.