Correlation Between AIR PRODCHEMICALS and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Japan Tobacco, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Japan Tobacco.
Diversification Opportunities for AIR PRODCHEMICALS and Japan Tobacco
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIR and Japan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Japan Tobacco go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Japan Tobacco
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.66 times more return on investment than Japan Tobacco. However, AIR PRODCHEMICALS is 1.51 times less risky than Japan Tobacco. It trades about 0.42 of its potential returns per unit of risk. Japan Tobacco is currently generating about 0.09 per unit of risk. If you would invest 28,740 in AIR PRODCHEMICALS on September 1, 2024 and sell it today you would earn a total of 2,890 from holding AIR PRODCHEMICALS or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Japan Tobacco
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Japan Tobacco |
AIR PRODCHEMICALS and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Japan Tobacco
The main advantage of trading using opposite AIR PRODCHEMICALS and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. SIVERS SEMICONDUCTORS AB | AIR PRODCHEMICALS vs. Darden Restaurants | AIR PRODCHEMICALS vs. Reliance Steel Aluminum | AIR PRODCHEMICALS vs. Q2M Managementberatung AG |
| Japan Tobacco vs. Performance Food Group | Japan Tobacco vs. JJ SNACK FOODS | Japan Tobacco vs. MUTUIONLINE | Japan Tobacco vs. LIFEWAY FOODS |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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