Correlation Between Saker Aviation and Japan Airport

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

By analyzing existing cross correlation between Saker Aviation Services and Japan Airport Terminal, you can compare the effects of market volatilities on Saker Aviation and Japan Airport 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 Saker Aviation with a short position of Japan Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saker Aviation and Japan Airport.

Diversification Opportunities for Saker Aviation and Japan Airport

0.31

Correlation Coefficient

Saker Aviation  Japan Airport

Weak diversification

The 3 months correlation between Saker and Japan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Saker Aviation Services and Japan Airport Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Airport Terminal and Saker Aviation 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 Saker Aviation Services are associated (or correlated) with Japan Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Airport Terminal has no effect on the direction of Saker Aviation i.e., Saker Aviation and Japan Airport go up and down completely randomly.

Pair Corralation between Saker Aviation and Japan Airport

Given the investment horizon of 90 days Saker Aviation Services is expected to generate 1.31 times more return on investment than Japan Airport. However, Saker Aviation is 1.31 times more volatile than Japan Airport Terminal. It trades about 0.0 of its potential returns per unit of risk. Japan Airport Terminal is currently generating about -0.16 per unit of risk. If you would invest  813.00  in Saker Aviation Services on November 29, 2024 and sell it today you would lose (13.00) from holding Saker Aviation Services or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Saker Aviation Services  vs.  Japan Airport Terminal

Saker Aviation Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saker Aviation Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Saker Aviation is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Japan Airport Terminal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Airport Terminal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Saker Aviation and Japan Airport

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

The idea behind Saker Aviation Services and Japan Airport Terminal 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.