Correlation Between Japan Asia and CVS Health
Can any of the company-specific risk be diversified away by investing in both Japan Asia and CVS Health 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 Japan Asia and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and CVS Health, you can compare the effects of market volatilities on Japan Asia and CVS Health 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 Japan Asia with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and CVS Health.
Diversification Opportunities for Japan Asia and CVS Health
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and CVS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Japan Asia 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 Japan Asia Investment are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Japan Asia i.e., Japan Asia and CVS Health go up and down completely randomly.
Pair Corralation between Japan Asia and CVS Health
Assuming the 90 days horizon Japan Asia Investment is expected to generate 0.53 times more return on investment than CVS Health. However, Japan Asia Investment is 1.9 times less risky than CVS Health. It trades about -0.05 of its potential returns per unit of risk. CVS Health is currently generating about -0.04 per unit of risk. If you would invest 135.00 in Japan Asia Investment on September 15, 2024 and sell it today you would lose (8.00) from holding Japan Asia Investment or give up 5.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Japan Asia Investment vs. CVS Health
Performance |
Timeline |
Japan Asia Investment |
CVS Health |
Japan Asia and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Japan Asia and CVS Health
The main advantage of trading using opposite Japan Asia and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.Japan Asia vs. Meiko Electronics Co | Japan Asia vs. STMicroelectronics NV | Japan Asia vs. ARROW ELECTRONICS | Japan Asia vs. UET United Electronic |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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