Correlation Between KRISPY KREME and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both KRISPY KREME 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 KRISPY KREME and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KRISPY KREME DL 01 and Japan Tobacco, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Japan Tobacco.
Diversification Opportunities for KRISPY KREME and Japan Tobacco
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KRISPY and Japan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and Japan Tobacco go up and down completely randomly.
Pair Corralation between KRISPY KREME and Japan Tobacco
Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the Japan Tobacco. In addition to that, KRISPY KREME is 1.71 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 1,926 in Japan Tobacco on September 3, 2024 and sell it today you would earn a total of 710.00 from holding Japan Tobacco or generate 36.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KRISPY KREME DL 01 vs. Japan Tobacco
Performance |
| Timeline |
| KRISPY KREME DL |
| Japan Tobacco |
KRISPY KREME and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRISPY KREME and Japan Tobacco
The main advantage of trading using opposite KRISPY KREME and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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.| KRISPY KREME vs. LIFENET INSURANCE CO | KRISPY KREME vs. CPU SOFTWAREHOUSE | KRISPY KREME vs. UNIVMUSIC GRPADR050 | KRISPY KREME vs. UPDATE SOFTWARE |
| Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. JAPAN TOBACCO UNSPADR12 | Japan Tobacco vs. Imperial Brands PLC |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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