Correlation Between Infrastrutture Wireless and Central Japan

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

By analyzing existing cross correlation between Infrastrutture Wireless Italiane and Central Japan Railway, you can compare the effects of market volatilities on Infrastrutture Wireless and Central Japan 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 Infrastrutture Wireless with a short position of Central Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infrastrutture Wireless and Central Japan.

Diversification Opportunities for Infrastrutture Wireless and Central Japan

0.52

Correlation Coefficient

Infrastrutture Wireless  Central Japan

Very weak diversification

The 3 months correlation between Infrastrutture and Central is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia and Central Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Japan Railway and Infrastrutture Wireless 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 Infrastrutture Wireless Italiane are associated (or correlated) with Central Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Japan Railway has no effect on the direction of Infrastrutture Wireless i.e., Infrastrutture Wireless and Central Japan go up and down completely randomly.

Pair Corralation between Infrastrutture Wireless and Central Japan

Assuming the 90 days horizon Infrastrutture Wireless Italiane is expected to generate 0.78 times more return on investment than Central Japan. However, Infrastrutture Wireless Italiane is 1.28 times less risky than Central Japan. It trades about 0.07 of its potential returns per unit of risk. Central Japan Railway is currently generating about -0.29 per unit of risk. If you would invest  985.00  in Infrastrutture Wireless Italiane on October 12, 2024 and sell it today you would earn a total of  11.00  from holding Infrastrutture Wireless Italiane or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Infrastrutture Wireless Italia  vs.  Central Japan Railway

Infrastrutture Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Central Japan Railway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Japan Railway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with Infrastrutture Wireless and Central Japan

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

The idea behind Infrastrutture Wireless Italiane and Central Japan Railway 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..