Correlation Between Japan Medical and HubSpot

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

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

Diversification Opportunities for Japan Medical and HubSpot

-0.82

Correlation Coefficient

Japan Medical  HubSpot

Pay attention - limited upside

The 3 months correlation between Japan and HubSpot is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and HubSpot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HubSpot and Japan Medical 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 Medical Dynamic are associated (or correlated) with HubSpot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HubSpot has no effect on the direction of Japan Medical i.e., Japan Medical and HubSpot go up and down completely randomly.

Pair Corralation between Japan Medical and HubSpot

Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the HubSpot. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 1.65 times less risky than HubSpot. The stock trades about -0.22 of its potential returns per unit of risk. The HubSpot is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  44,990  in HubSpot on September 12, 2024 and sell it today you would earn a total of  24,650  from holding HubSpot or generate 54.79% return on investment over 90 days.

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

Japan Medical Dynamic  vs.  HubSpot

Japan Medical Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

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

HubSpot

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HubSpot are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, HubSpot reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japan Medical and HubSpot

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

The idea behind Japan Medical Dynamic and HubSpot 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.