Correlation Between Mizuho Financial and Japan Asia

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

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

Diversification Opportunities for Mizuho Financial and Japan Asia

0.35

Correlation Coefficient

Mizuho Financial  Japan Asia

Weak diversification

The 3 months correlation between Mizuho and Japan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group and Japan Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Asia Investment and Mizuho Financial 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 Mizuho Financial Group are associated (or correlated) with Japan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Asia Investment has no effect on the direction of Mizuho Financial i.e., Mizuho Financial and Japan Asia go up and down completely randomly.

Pair Corralation between Mizuho Financial and Japan Asia

Assuming the 90 days trading horizon Mizuho Financial is expected to generate 2.17 times less return on investment than Japan Asia. But when comparing it to its historical volatility, Mizuho Financial Group is 1.41 times less risky than Japan Asia. It trades about 0.13 of its potential returns per unit of risk. Japan Asia Investment is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Japan Asia Investment on December 29, 2024 and sell it today you would earn a total of  50.00  from holding Japan Asia Investment or generate 39.06% return on investment over 90 days.

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

Mizuho Financial Group  vs.  Japan Asia Investment

Mizuho Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mizuho Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Japan Asia Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Asia Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Japan Asia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mizuho Financial and Japan Asia

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

The idea behind Mizuho Financial Group and Japan Asia 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.