Correlation Between Japan Steel and ALEFARM BREWING

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

By analyzing existing cross correlation between The Japan Steel and ALEFARM BREWING DK 05, you can compare the effects of market volatilities on Japan Steel and ALEFARM BREWING 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 Steel with a short position of ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Steel and ALEFARM BREWING.

Diversification Opportunities for Japan Steel and ALEFARM BREWING

-0.73

Correlation Coefficient

Japan Steel  ALEFARM BREWING

Pay attention - limited upside

The 3 months correlation between Japan and ALEFARM is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Japan Steel and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK and Japan Steel 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 The Japan Steel are associated (or correlated) with ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of Japan Steel i.e., Japan Steel and ALEFARM BREWING go up and down completely randomly.

Pair Corralation between Japan Steel and ALEFARM BREWING

Assuming the 90 days horizon The Japan Steel is expected to generate 0.62 times more return on investment than ALEFARM BREWING. However, The Japan Steel is 1.62 times less risky than ALEFARM BREWING. It trades about 0.16 of its potential returns per unit of risk. ALEFARM BREWING DK 05 is currently generating about -0.01 per unit of risk. If you would invest  3,620  in The Japan Steel on April 20, 2025 and sell it today you would earn a total of  1,080  from holding The Japan Steel or generate 29.83% return on investment over 90 days.

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

The Japan Steel  vs.  ALEFARM BREWING DK 05

Japan Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Japan Steel are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Japan Steel reported solid returns over the last few months and may actually be approaching a breakup point.

ALEFARM BREWING DK

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ALEFARM BREWING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Japan Steel and ALEFARM BREWING

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

The idea behind The Japan Steel and ALEFARM BREWING DK 05 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 .