Correlation Between ADRIATIC METALS and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS 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 ADRIATIC METALS and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on ADRIATIC METALS 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 ADRIATIC METALS with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and JAPAN TOBACCO.
Diversification Opportunities for ADRIATIC METALS and JAPAN TOBACCO
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADRIATIC and JAPAN is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 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 ADRIATIC METALS 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 ADRIATIC METALS LS 013355 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 ADRIATIC METALS i.e., ADRIATIC METALS and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and JAPAN TOBACCO
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 1.77 times more return on investment than JAPAN TOBACCO. However, ADRIATIC METALS is 1.77 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.08 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.05 per unit of risk. If you would invest 230.00 in ADRIATIC METALS LS 013355 on September 13, 2024 and sell it today you would earn a total of 10.00 from holding ADRIATIC METALS LS 013355 or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADRIATIC METALS LS 013355 vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| ADRIATIC METALS LS |
| JAPAN TOBACCO UNSPADR12 |
ADRIATIC METALS and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and JAPAN TOBACCO
The main advantage of trading using opposite ADRIATIC METALS and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS 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.| ADRIATIC METALS vs. Goodyear Tire Rubber | ADRIATIC METALS vs. Materialise NV | ADRIATIC METALS vs. CN MODERN DAIRY | ADRIATIC METALS vs. Performance Food Group |
| JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. Japan Tobacco |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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