Correlation Between NORWEGIAN AIR and Japan Post

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

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

Diversification Opportunities for NORWEGIAN AIR and Japan Post

0.08

Correlation Coefficient

NORWEGIAN AIR  Japan Post

Significant diversification

The 3 months correlation between NORWEGIAN and Japan is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Japan Post Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Insurance and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT are associated (or correlated) with Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Insurance has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Japan Post go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and Japan Post

Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 2.85 times less return on investment than Japan Post. In addition to that, NORWEGIAN AIR is 1.19 times more volatile than Japan Post Insurance. It trades about 0.16 of its total potential returns per unit of risk. Japan Post Insurance is currently generating about 0.53 per unit of volatility. If you would invest  1,500  in Japan Post Insurance on September 1, 2024 and sell it today you would earn a total of  460.00  from holding Japan Post Insurance or generate 30.67% return on investment over 90 days.

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

NORWEGIAN AIR SHUT  vs.  Japan Post Insurance

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NORWEGIAN AIR SHUT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, NORWEGIAN AIR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Japan Post Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Post Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Japan Post unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NORWEGIAN AIR and Japan Post

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

The idea behind NORWEGIAN AIR SHUT and Japan Post Insurance 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.