Correlation Between CARGOJET INC and Tokyo Gas

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

By analyzing existing cross correlation between CARGOJET INC VAR and Tokyo Gas CoLtd, you can compare the effects of market volatilities on CARGOJET INC and Tokyo Gas 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 CARGOJET INC with a short position of Tokyo Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARGOJET INC and Tokyo Gas.

Diversification Opportunities for CARGOJET INC and Tokyo Gas

-0.81

Correlation Coefficient

CARGOJET INC  Tokyo Gas

Pay attention - limited upside

The 3 months correlation between CARGOJET and Tokyo is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CARGOJET INC VAR and Tokyo Gas CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Gas CoLtd and CARGOJET INC 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 CARGOJET INC VAR are associated (or correlated) with Tokyo Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Gas CoLtd has no effect on the direction of CARGOJET INC i.e., CARGOJET INC and Tokyo Gas go up and down completely randomly.

Pair Corralation between CARGOJET INC and Tokyo Gas

Assuming the 90 days trading horizon CARGOJET INC is expected to generate 10.11 times less return on investment than Tokyo Gas. But when comparing it to its historical volatility, CARGOJET INC VAR is 1.1 times less risky than Tokyo Gas. It trades about 0.01 of its potential returns per unit of risk. Tokyo Gas CoLtd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,240  in Tokyo Gas CoLtd on September 12, 2024 and sell it today you would earn a total of  520.00  from holding Tokyo Gas CoLtd or generate 23.21% return on investment over 90 days.

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

CARGOJET INC VAR  vs.  Tokyo Gas CoLtd

CARGOJET INC VAR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARGOJET INC VAR 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Tokyo Gas CoLtd

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tokyo Gas CoLtd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Tokyo Gas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CARGOJET INC and Tokyo Gas

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

The idea behind CARGOJET INC VAR and Tokyo Gas CoLtd 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.