Correlation Between Blackstone and Japan Asia

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

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

Diversification Opportunities for Blackstone and Japan Asia

-0.19

Correlation Coefficient

Blackstone  Japan Asia

Good diversification

The 3 months correlation between Blackstone and Japan is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Group 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 Blackstone 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 Blackstone Group 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 Blackstone i.e., Blackstone and Japan Asia go up and down completely randomly.

Pair Corralation between Blackstone and Japan Asia

Assuming the 90 days trading horizon Blackstone Group is expected to generate 1.05 times more return on investment than Japan Asia. However, Blackstone is 1.05 times more volatile than Japan Asia Investment. It trades about 0.29 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  12,479  in Blackstone Group on September 3, 2024 and sell it today you would earn a total of  5,641  from holding Blackstone Group or generate 45.2% return on investment over 90 days.

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

Blackstone Group  vs.  Japan Asia Investment

Blackstone Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Blackstone reported solid returns over the last few months and may actually be approaching a breakup point.

Japan Asia Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Blackstone and Japan Asia

The main advantage of trading using opposite Blackstone and Japan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackstone 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 Blackstone Group 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.