Correlation Between THRACE PLASTICS and Japan Real

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

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

Diversification Opportunities for THRACE PLASTICS and Japan Real

0.1

Correlation Coefficient

THRACE PLASTICS  Japan Real

Average diversification

The 3 months correlation between THRACE and Japan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and Japan Real go up and down completely randomly.

Pair Corralation between THRACE PLASTICS and Japan Real

Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 1.43 times more return on investment than Japan Real. However, THRACE PLASTICS is 1.43 times more volatile than Japan Real Estate. It trades about -0.06 of its potential returns per unit of risk. Japan Real Estate is currently generating about -0.21 per unit of risk. If you would invest  400.00  in THRACE PLASTICS on September 19, 2024 and sell it today you would lose (6.00) from holding THRACE PLASTICS or give up 1.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

THRACE PLASTICS  vs.  Japan Real Estate

THRACE PLASTICS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, THRACE PLASTICS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Japan Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with THRACE PLASTICS and Japan Real

The main advantage of trading using opposite THRACE PLASTICS and Japan Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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 THRACE PLASTICS 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.