Correlation Between Japan Medical and AM EAGLE

Can any of the company-specific risk be diversified away by investing in both Japan Medical and AM EAGLE 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 AM EAGLE 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 AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Japan Medical and AM EAGLE 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 AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and AM EAGLE.

Diversification Opportunities for Japan Medical and AM EAGLE

0.32

Correlation Coefficient

Japan Medical  AM EAGLE

Weak diversification

The 3 months correlation between Japan and AFG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Japan Medical i.e., Japan Medical and AM EAGLE go up and down completely randomly.

Pair Corralation between Japan Medical and AM EAGLE

Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the AM EAGLE. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 1.72 times less risky than AM EAGLE. The stock trades about -0.21 of its potential returns per unit of risk. The AM EAGLE OUTFITTERS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,718  in AM EAGLE OUTFITTERS on September 5, 2024 and sell it today you would earn a total of  172.00  from holding AM EAGLE OUTFITTERS or generate 10.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Japan Medical Dynamic  vs.  AM EAGLE OUTFITTERS

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.

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AM EAGLE OUTFITTERS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, AM EAGLE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Japan Medical and AM EAGLE

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

The idea behind Japan Medical Dynamic and AM EAGLE OUTFITTERS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.