Correlation Between CapitaLand Investment and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment 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 CapitaLand Investment and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapitaLand Investment Limited and Japan Tobacco, you can compare the effects of market volatilities on CapitaLand Investment 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 CapitaLand Investment with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Japan Tobacco.
Diversification Opportunities for CapitaLand Investment and Japan Tobacco
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CapitaLand and Japan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and CapitaLand Investment 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 CapitaLand Investment Limited 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 has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Japan Tobacco go up and down completely randomly.
Pair Corralation between CapitaLand Investment and Japan Tobacco
Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Japan Tobacco. In addition to that, CapitaLand Investment is 1.1 times more volatile than Japan Tobacco. It trades about -0.01 of its total potential returns per unit of risk. Japan Tobacco is currently generating about 0.05 per unit of volatility. If you would invest 2,089 in Japan Tobacco on September 12, 2024 and sell it today you would earn a total of 561.00 from holding Japan Tobacco or generate 26.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. Japan Tobacco
Performance |
| Timeline |
| CapitaLand Investment |
| Japan Tobacco |
CapitaLand Investment and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and Japan Tobacco
The main advantage of trading using opposite CapitaLand Investment and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment 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.| CapitaLand Investment vs. Superior Plus Corp | CapitaLand Investment vs. SIVERS SEMICONDUCTORS AB | CapitaLand Investment vs. Reliance Steel Aluminum | CapitaLand Investment vs. CHINA HUARONG ENERHD 50 |
| Japan Tobacco vs. TEXAS ROADHOUSE | Japan Tobacco vs. COPLAND ROAD CAPITAL | Japan Tobacco vs. QUEEN S ROAD | Japan Tobacco vs. Kaufman Broad SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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