Correlation Between Kajima Corp and Acciona SA

Can any of the company-specific risk be diversified away by investing in both Kajima Corp and Acciona SA 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 Kajima Corp and Acciona SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kajima Corp ADR and Acciona SA, you can compare the effects of market volatilities on Kajima Corp and Acciona SA 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 Kajima Corp with a short position of Acciona SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kajima Corp and Acciona SA.

Diversification Opportunities for Kajima Corp and Acciona SA

0.66

Correlation Coefficient

Kajima Corp  Acciona SA

Poor diversification

The 3 months correlation between Kajima and Acciona is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kajima Corp ADR and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and Kajima Corp 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 Kajima Corp ADR are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Kajima Corp i.e., Kajima Corp and Acciona SA go up and down completely randomly.

Pair Corralation between Kajima Corp and Acciona SA

Assuming the 90 days horizon Kajima Corp ADR is expected to generate 1.8 times more return on investment than Acciona SA. However, Kajima Corp is 1.8 times more volatile than Acciona SA. It trades about 0.08 of its potential returns per unit of risk. Acciona SA is currently generating about 0.12 per unit of risk. If you would invest  1,833  in Kajima Corp ADR on December 29, 2024 and sell it today you would earn a total of  309.00  from holding Kajima Corp ADR or generate 16.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.44%
Values	Daily Returns

Kajima Corp ADR  vs.  Acciona SA

Kajima Corp ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kajima Corp ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Kajima Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Acciona SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acciona SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, Acciona SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kajima Corp and Acciona SA

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

The idea behind Kajima Corp ADR and Acciona SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.