Correlation Between Us High and Japanese Small

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

By analyzing existing cross correlation between Us High Relative and Japanese Small Pany, you can compare the effects of market volatilities on Us High and Japanese Small 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 Us High with a short position of Japanese Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us High and Japanese Small.

Diversification Opportunities for Us High and Japanese Small

-0.26

Correlation Coefficient

Us High  Japanese Small

Very good diversification

The 3 months correlation between DURPX and Japanese is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Us High Relative and Japanese Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japanese Small Pany and Us High 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 Us High Relative are associated (or correlated) with Japanese Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japanese Small Pany has no effect on the direction of Us High i.e., Us High and Japanese Small go up and down completely randomly.

Pair Corralation between Us High and Japanese Small

Assuming the 90 days horizon Us High Relative is expected to generate 0.71 times more return on investment than Japanese Small. However, Us High Relative is 1.41 times less risky than Japanese Small. It trades about 0.07 of its potential returns per unit of risk. Japanese Small Pany is currently generating about 0.01 per unit of risk. If you would invest  2,509  in Us High Relative on September 13, 2024 and sell it today you would earn a total of  44.00  from holding Us High Relative or generate 1.75% return on investment over 90 days.

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

Us High Relative  vs.  Japanese Small Pany

Us High Relative

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us High Relative are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Us High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Japanese Small Pany

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japanese Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Japanese Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us High and Japanese Small

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

The idea behind Us High Relative and Japanese Small Pany 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.