Correlation Between STORE ELECTRONIC and Japan Real

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

By analyzing existing cross correlation between STORE ELECTRONIC and Japan Real Estate, you can compare the effects of market volatilities on STORE ELECTRONIC and Japan Real 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 STORE ELECTRONIC with a short position of Japan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and Japan Real.

Diversification Opportunities for STORE ELECTRONIC and Japan Real

0.01

Correlation Coefficient

STORE ELECTRONIC  Japan Real

Significant diversification

The 3 months correlation between STORE and Japan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and Japan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Real Estate and STORE ELECTRONIC 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 STORE ELECTRONIC are associated (or correlated) with Japan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Real Estate has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and Japan Real go up and down completely randomly.

Pair Corralation between STORE ELECTRONIC and Japan Real

Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 2.26 times more return on investment than Japan Real. However, STORE ELECTRONIC is 2.26 times more volatile than Japan Real Estate. It trades about 0.09 of its potential returns per unit of risk. Japan Real Estate is currently generating about 0.09 per unit of risk. If you would invest  17,480  in STORE ELECTRONIC on December 28, 2024 and sell it today you would earn a total of  2,780  from holding STORE ELECTRONIC or generate 15.9% return on investment over 90 days.

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

STORE ELECTRONIC  vs.  Japan Real Estate

STORE ELECTRONIC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, STORE ELECTRONIC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Japan Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Japan Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with STORE ELECTRONIC and Japan Real

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

The idea behind STORE ELECTRONIC and Japan Real Estate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.