Correlation Between AEON STORES and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both AEON STORES 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 AEON STORES and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on AEON STORES 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 AEON STORES with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and JAPAN TOBACCO.
Diversification Opportunities for AEON STORES and JAPAN TOBACCO
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AEON and JAPAN is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES 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 AEON STORES 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 AEON STORES 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 AEON STORES i.e., AEON STORES and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between AEON STORES and JAPAN TOBACCO
Assuming the 90 days trading horizon AEON STORES is expected to under-perform the JAPAN TOBACCO. But the stock apears to be less risky and, when comparing its historical volatility, AEON STORES is 2.74 times less risky than JAPAN TOBACCO. The stock trades about -0.1 of its potential returns per unit of risk. The JAPAN TOBACCO UNSPADR12 is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,236 in JAPAN TOBACCO UNSPADR12 on October 13, 2024 and sell it today you would lose (76.00) from holding JAPAN TOBACCO UNSPADR12 or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEON STORES vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| AEON STORES |
| JAPAN TOBACCO UNSPADR12 |
AEON STORES and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and JAPAN TOBACCO
The main advantage of trading using opposite AEON STORES and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES 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.| AEON STORES vs. AGRICULTBK HADR25 YC | AEON STORES vs. Information Services International Dentsu | AEON STORES vs. Data Modul AG | AEON STORES vs. MICRONIC MYDATA |
| JAPAN TOBACCO vs. AEON STORES | JAPAN TOBACCO vs. BJs Wholesale Club | JAPAN TOBACCO vs. SIDETRADE EO 1 | JAPAN TOBACCO vs. H2O Retailing |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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