Correlation Between Kajima Corp and Bowman Consulting

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

Diversification Opportunities for Kajima Corp and Bowman Consulting

-0.71

Correlation Coefficient

Kajima Corp  Bowman Consulting

Pay attention - limited upside

The 3 months correlation between Kajima and Bowman is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kajima Corp ADR and Bowman Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowman Consulting 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 Bowman Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowman Consulting has no effect on the direction of Kajima Corp i.e., Kajima Corp and Bowman Consulting go up and down completely randomly.

Pair Corralation between Kajima Corp and Bowman Consulting

Assuming the 90 days horizon Kajima Corp ADR is expected to generate 1.4 times more return on investment than Bowman Consulting. However, Kajima Corp is 1.4 times more volatile than Bowman Consulting Group. It trades about 0.08 of its potential returns per unit of risk. Bowman Consulting Group is currently generating about -0.04 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kajima Corp ADR  vs.  Bowman Consulting Group

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.

Bowman Consulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowman Consulting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Kajima Corp and Bowman Consulting

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

The idea behind Kajima Corp ADR and Bowman Consulting Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.