Correlation Between Japan Medical and SPECTRAL MEDICAL

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

By analyzing existing cross correlation between Japan Medical Dynamic and SPECTRAL MEDICAL, you can compare the effects of market volatilities on Japan Medical and SPECTRAL MEDICAL 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 Medical with a short position of SPECTRAL MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and SPECTRAL MEDICAL.

Diversification Opportunities for Japan Medical and SPECTRAL MEDICAL

-0.07

Correlation Coefficient

Japan Medical  SPECTRAL MEDICAL

Good diversification

The 3 months correlation between Japan and SPECTRAL is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and SPECTRAL MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRAL MEDICAL and Japan Medical 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 Medical Dynamic are associated (or correlated) with SPECTRAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRAL MEDICAL has no effect on the direction of Japan Medical i.e., Japan Medical and SPECTRAL MEDICAL go up and down completely randomly.

Pair Corralation between Japan Medical and SPECTRAL MEDICAL

Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the SPECTRAL MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 1.59 times less risky than SPECTRAL MEDICAL. The stock trades about -0.09 of its potential returns per unit of risk. The SPECTRAL MEDICAL is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  49.00  in SPECTRAL MEDICAL on April 21, 2025 and sell it today you would earn a total of  1.00  from holding SPECTRAL MEDICAL or generate 2.04% return on investment over 90 days.

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

Japan Medical Dynamic  vs.  SPECTRAL MEDICAL

Japan Medical Dynamic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Medical Dynamic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SPECTRAL MEDICAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPECTRAL MEDICAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPECTRAL MEDICAL 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 Medical and SPECTRAL MEDICAL

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

The idea behind Japan Medical Dynamic and SPECTRAL MEDICAL 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.