Correlation Between Japan Medical and United Internet

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

Diversification Opportunities for Japan Medical and United Internet

0.58

Correlation Coefficient

Japan Medical  United Internet

Very weak diversification

The 3 months correlation between Japan and United is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Japan Medical i.e., Japan Medical and United Internet go up and down completely randomly.

Pair Corralation between Japan Medical and United Internet

Assuming the 90 days horizon Japan Medical Dynamic is expected to generate 0.69 times more return on investment than United Internet. However, Japan Medical Dynamic is 1.45 times less risky than United Internet. It trades about 0.03 of its potential returns per unit of risk. United Internet AG is currently generating about -0.09 per unit of risk. If you would invest  362.00  in Japan Medical Dynamic on September 5, 2024 and sell it today you would earn a total of  14.00  from holding Japan Medical Dynamic or generate 3.87% return on investment over 90 days.

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

Japan Medical Dynamic  vs.  United Internet AG

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.

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG 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 fundamental 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.

Pair Trading with Japan Medical and United Internet

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

The idea behind Japan Medical Dynamic and United Internet AG 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.