Correlation Between SPECTRAL MEDICAL and Japan Asia

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

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

Diversification Opportunities for SPECTRAL MEDICAL and Japan Asia

0.16

Correlation Coefficient

SPECTRAL MEDICAL  Japan Asia

Average diversification

The 3 months correlation between SPECTRAL and Japan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SPECTRAL MEDICAL 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 SPECTRAL MEDICAL 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 SPECTRAL MEDICAL 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 SPECTRAL MEDICAL i.e., SPECTRAL MEDICAL and Japan Asia go up and down completely randomly.

Pair Corralation between SPECTRAL MEDICAL and Japan Asia

Assuming the 90 days horizon SPECTRAL MEDICAL is expected to generate 1.44 times more return on investment than Japan Asia. However, SPECTRAL MEDICAL is 1.44 times more volatile than Japan Asia Investment. It trades about 0.04 of its potential returns per unit of risk. Japan Asia Investment is currently generating about 0.0 per unit of risk. If you would invest  23.00  in SPECTRAL MEDICAL on October 24, 2024 and sell it today you would earn a total of  9.00  from holding SPECTRAL MEDICAL or generate 39.13% return on investment over 90 days.

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

SPECTRAL MEDICAL  vs.  Japan Asia Investment

SPECTRAL MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPECTRAL MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Japan Asia Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Asia Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Japan Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPECTRAL MEDICAL and Japan Asia

The main advantage of trading using opposite SPECTRAL MEDICAL and Japan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPECTRAL MEDICAL 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 SPECTRAL MEDICAL 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.