Correlation Between Japan Vietnam and Asia Pacific

Can any of the company-specific risk be diversified away by investing in both Japan Vietnam and Asia Pacific 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 Vietnam and Asia Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Japan Vietnam Medical and Asia Pacific Investment, you can compare the effects of market volatilities on Japan Vietnam and Asia Pacific 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 Vietnam with a short position of Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Vietnam and Asia Pacific.

Diversification Opportunities for Japan Vietnam and Asia Pacific

0.59

Correlation Coefficient

Japan Vietnam  Asia Pacific

Very weak diversification

The 3 months correlation between Japan and Asia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Japan Vietnam Medical and Asia Pacific Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Investment and Japan Vietnam 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 Vietnam Medical are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Investment has no effect on the direction of Japan Vietnam i.e., Japan Vietnam and Asia Pacific go up and down completely randomly.

Pair Corralation between Japan Vietnam and Asia Pacific

Assuming the 90 days trading horizon Japan Vietnam Medical is expected to generate 0.68 times more return on investment than Asia Pacific. However, Japan Vietnam Medical is 1.47 times less risky than Asia Pacific. It trades about 0.27 of its potential returns per unit of risk. Asia Pacific Investment is currently generating about 0.16 per unit of risk. If you would invest  310,000  in Japan Vietnam Medical on September 16, 2024 and sell it today you would earn a total of  38,000  from holding Japan Vietnam Medical or generate 12.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Japan Vietnam Medical  vs.  Asia Pacific Investment

Japan Vietnam Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Vietnam Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Japan Vietnam is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Asia Pacific Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Pacific Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Asia Pacific is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Japan Vietnam and Asia Pacific

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

The idea behind Japan Vietnam Medical and Asia Pacific Investment 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.