Correlation Between JAPAN POST and Uwharrie Capital

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

Diversification Opportunities for JAPAN POST and Uwharrie Capital

0.02

Correlation Coefficient

JAPAN POST  Uwharrie Capital

Significant diversification

The 3 months correlation between JAPAN and Uwharrie is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN POST BANK and Uwharrie Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uwharrie Capital 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 Uwharrie Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uwharrie Capital Corp has no effect on the direction of JAPAN POST i.e., JAPAN POST and Uwharrie Capital go up and down completely randomly.

Pair Corralation between JAPAN POST and Uwharrie Capital

Assuming the 90 days horizon JAPAN POST is expected to generate 1.77 times less return on investment than Uwharrie Capital. In addition to that, JAPAN POST is 1.42 times more volatile than Uwharrie Capital Corp. It trades about 0.04 of its total potential returns per unit of risk. Uwharrie Capital Corp is currently generating about 0.09 per unit of volatility. If you would invest  780.00  in Uwharrie Capital Corp on August 31, 2024 and sell it today you would earn a total of  60.00  from holding Uwharrie Capital Corp or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JAPAN POST BANK  vs.  Uwharrie Capital Corp

JAPAN POST BANK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN POST BANK are ranked lower than 2 (%) 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.

Uwharrie Capital Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uwharrie Capital Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Uwharrie Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with JAPAN POST and Uwharrie Capital

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

The idea behind JAPAN POST BANK and Uwharrie Capital 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.