Correlation Between JAPAN AIRLINES and KAUFMAN ET

Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and KAUFMAN ET 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 AIRLINES and KAUFMAN ET into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JAPAN AIRLINES and KAUFMAN ET BROAD, you can compare the effects of market volatilities on JAPAN AIRLINES and KAUFMAN ET 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 AIRLINES with a short position of KAUFMAN ET. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and KAUFMAN ET.

Diversification Opportunities for JAPAN AIRLINES and KAUFMAN ET

0.91

Correlation Coefficient

JAPAN AIRLINES  KAUFMAN ET

Almost no diversification

The 3 months correlation between JAPAN and KAUFMAN is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD and JAPAN AIRLINES 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 AIRLINES are associated (or correlated) with KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and KAUFMAN ET go up and down completely randomly.

Pair Corralation between JAPAN AIRLINES and KAUFMAN ET

Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 0.89 times more return on investment than KAUFMAN ET. However, JAPAN AIRLINES is 1.13 times less risky than KAUFMAN ET. It trades about 0.15 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about 0.11 per unit of risk. If you would invest  1,500  in JAPAN AIRLINES on April 11, 2025 and sell it today you would earn a total of  210.00  from holding JAPAN AIRLINES or generate 14.0% return on investment over 90 days.

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

JAPAN AIRLINES  vs.  KAUFMAN ET BROAD

JAPAN AIRLINES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, JAPAN AIRLINES exhibited solid returns over the last few months and may actually be approaching a breakup point.

KAUFMAN ET BROAD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KAUFMAN ET BROAD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, KAUFMAN ET may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with JAPAN AIRLINES and KAUFMAN ET

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

The idea behind JAPAN AIRLINES and KAUFMAN ET BROAD 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.