Correlation Between JAPAN POST and Solvay Bank

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

Diversification Opportunities for JAPAN POST and Solvay Bank

-0.05

Correlation Coefficient

JAPAN POST  Solvay Bank

Good diversification

The 3 months correlation between JAPAN and Solvay is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN POST BANK and Solvay Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay Bank Corp 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 Solvay Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay Bank Corp has no effect on the direction of JAPAN POST i.e., JAPAN POST and Solvay Bank go up and down completely randomly.

Pair Corralation between JAPAN POST and Solvay Bank

Assuming the 90 days horizon JAPAN POST BANK is expected to generate 1.5 times more return on investment than Solvay Bank. However, JAPAN POST is 1.5 times more volatile than Solvay Bank Corp. It trades about -0.01 of its potential returns per unit of risk. Solvay Bank Corp is currently generating about -0.26 per unit of risk. If you would invest  938.00  in JAPAN POST BANK on October 7, 2024 and sell it today you would lose (18.00) from holding JAPAN POST BANK or give up 1.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

JAPAN POST BANK  vs.  Solvay Bank Corp

JAPAN POST BANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JAPAN POST BANK has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Solvay Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solvay Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JAPAN POST and Solvay Bank

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

The idea behind JAPAN POST BANK and Solvay Bank Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.