Correlation Between Amdocs and JAPAN AIRLINES

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

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

Diversification Opportunities for Amdocs and JAPAN AIRLINES

-0.1

Correlation Coefficient

Amdocs  JAPAN AIRLINES

Good diversification

The 3 months correlation between Amdocs and JAPAN is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Amdocs Limited and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES and Amdocs 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 Amdocs Limited are associated (or correlated) with JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of Amdocs i.e., Amdocs and JAPAN AIRLINES go up and down completely randomly.

Pair Corralation between Amdocs and JAPAN AIRLINES

Assuming the 90 days horizon Amdocs Limited is expected to under-perform the JAPAN AIRLINES. But the stock apears to be less risky and, when comparing its historical volatility, Amdocs Limited is 1.06 times less risky than JAPAN AIRLINES. The stock trades about -0.07 of its potential returns per unit of risk. The JAPAN AIRLINES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,720  in JAPAN AIRLINES on May 10, 2025 and sell it today you would earn a total of  90.00  from holding JAPAN AIRLINES or generate 5.23% return on investment over 90 days.

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

Amdocs Limited  vs.  JAPAN AIRLINES

Amdocs Limited

Risk-Adjusted Performance

Weakest

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

JAPAN AIRLINES

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JAPAN AIRLINES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amdocs and JAPAN AIRLINES

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

The idea behind Amdocs Limited and JAPAN AIRLINES 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..