Correlation Between CN YANGTPWR and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both CN YANGTPWR 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 CN YANGTPWR and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN YANGTPWR GDR and Japan Tobacco, you can compare the effects of market volatilities on CN YANGTPWR 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 CN YANGTPWR with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN YANGTPWR and Japan Tobacco.
Diversification Opportunities for CN YANGTPWR and Japan Tobacco
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CYZB and Japan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CN YANGTPWR GDR and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and CN YANGTPWR 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 CN YANGTPWR GDR 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 CN YANGTPWR i.e., CN YANGTPWR and Japan Tobacco go up and down completely randomly.
Pair Corralation between CN YANGTPWR and Japan Tobacco
Assuming the 90 days trading horizon CN YANGTPWR is expected to generate 1.01 times less return on investment than Japan Tobacco. In addition to that, CN YANGTPWR is 1.42 times more volatile than Japan Tobacco. It trades about 0.04 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 1,863 in Japan Tobacco on September 3, 2024 and sell it today you would earn a total of 800.00 from holding Japan Tobacco or generate 42.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN YANGTPWR GDR vs. Japan Tobacco
Performance |
| Timeline |
| CN YANGTPWR GDR |
| Japan Tobacco |
CN YANGTPWR and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN YANGTPWR and Japan Tobacco
The main advantage of trading using opposite CN YANGTPWR and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN YANGTPWR 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.| CN YANGTPWR vs. CENTRICA ADR NEW | CN YANGTPWR vs. Superior Plus Corp | CN YANGTPWR vs. NMI Holdings | CN YANGTPWR vs. Origin Agritech |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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