Correlation Between Japan Post and Project Energy

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

Diversification Opportunities for Japan Post and Project Energy

-0.67

Correlation Coefficient

Japan Post  Project Energy

Excellent diversification

The 3 months correlation between Japan and Project is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings and Project Energy Reimagined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Project Energy Reimagined 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 Project Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Project Energy Reimagined has no effect on the direction of Japan Post i.e., Japan Post and Project Energy go up and down completely randomly.

Pair Corralation between Japan Post and Project Energy

Assuming the 90 days horizon Japan Post Holdings is expected to generate 0.64 times more return on investment than Project Energy. However, Japan Post Holdings is 1.57 times less risky than Project Energy. It trades about 0.22 of its potential returns per unit of risk. Project Energy Reimagined is currently generating about -0.08 per unit of risk. If you would invest  868.00  in Japan Post Holdings on September 14, 2024 and sell it today you would earn a total of  168.00  from holding Japan Post Holdings or generate 19.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	8.43%
Values	Daily Returns

Japan Post Holdings  vs.  Project Energy Reimagined

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.

Project Energy Reimagined

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Project Energy Reimagined has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Project Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Japan Post and Project Energy

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

The idea behind Japan Post Holdings and Project Energy Reimagined 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.