Correlation Between MOVIE GAMES and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both MOVIE GAMES and JAPAN TOBACCO 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 MOVIE GAMES and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOVIE GAMES SA and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on MOVIE GAMES and JAPAN TOBACCO 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 MOVIE GAMES with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOVIE GAMES and JAPAN TOBACCO.
Diversification Opportunities for MOVIE GAMES and JAPAN TOBACCO
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MOVIE and JAPAN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 and MOVIE GAMES 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 MOVIE GAMES SA are associated (or correlated) with JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between MOVIE GAMES and JAPAN TOBACCO
Assuming the 90 days horizon MOVIE GAMES SA is expected to under-perform the JAPAN TOBACCO. In addition to that, MOVIE GAMES is 1.63 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about -0.13 of its total potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.02 per unit of volatility. If you would invest 1,246 in JAPAN TOBACCO UNSPADR12 on September 1, 2024 and sell it today you would earn a total of 24.00 from holding JAPAN TOBACCO UNSPADR12 or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOVIE GAMES SA vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| MOVIE GAMES SA |
| JAPAN TOBACCO UNSPADR12 |
MOVIE GAMES and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOVIE GAMES and JAPAN TOBACCO
The main advantage of trading using opposite MOVIE GAMES and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOVIE GAMES position performs unexpectedly, JAPAN TOBACCO 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 TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| MOVIE GAMES vs. UNITED RENTALS | MOVIE GAMES vs. Ribbon Communications | MOVIE GAMES vs. Madison Square Garden | MOVIE GAMES vs. United Rentals |
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Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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