Correlation Between Japan Post and Golden Arrow

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

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

Diversification Opportunities for Japan Post and Golden Arrow

-0.71

Correlation Coefficient

Japan Post  Golden Arrow

Pay attention - limited upside

The 3 months correlation between Japan and Golden is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings and Golden Arrow Merger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Arrow Merger and Japan Post 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 Post Holdings are associated (or correlated) with Golden Arrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Arrow Merger has no effect on the direction of Japan Post i.e., Japan Post and Golden Arrow go up and down completely randomly.

Pair Corralation between Japan Post and Golden Arrow

Assuming the 90 days horizon Japan Post Holdings is expected to under-perform the Golden Arrow. In addition to that, Japan Post is 13.32 times more volatile than Golden Arrow Merger. It trades about -0.13 of its total potential returns per unit of risk. Golden Arrow Merger is currently generating about -0.06 per unit of volatility. If you would invest  1,000.00  in Golden Arrow Merger on September 14, 2024 and sell it today you would lose (1,000.00) from holding Golden Arrow Merger or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	39.18%
Values	Daily Returns

Japan Post Holdings  vs.  Golden Arrow Merger

Japan Post Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Post Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Japan Post is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Golden Arrow Merger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Arrow Merger has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Golden Arrow is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Japan Post and Golden Arrow

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

The idea behind Japan Post Holdings and Golden Arrow Merger 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .