Correlation Between Diamyd Medical and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical 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 Diamyd Medical and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Diamyd Medical 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 Diamyd Medical with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and JAPAN TOBACCO.
Diversification Opportunities for Diamyd Medical and JAPAN TOBACCO
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diamyd and JAPAN is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB 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 Diamyd Medical 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 Diamyd Medical AB 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 Diamyd Medical i.e., Diamyd Medical and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between Diamyd Medical and JAPAN TOBACCO
Assuming the 90 days horizon Diamyd Medical AB is expected to generate 3.06 times more return on investment than JAPAN TOBACCO. However, Diamyd Medical is 3.06 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.05 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.06 per unit of risk. If you would invest 81.00 in Diamyd Medical AB on September 12, 2024 and sell it today you would earn a total of 54.00 from holding Diamyd Medical AB or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| Diamyd Medical AB |
| JAPAN TOBACCO UNSPADR12 |
Diamyd Medical and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and JAPAN TOBACCO
The main advantage of trading using opposite Diamyd Medical and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical 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.| Diamyd Medical vs. Moderna | Diamyd Medical vs. BioNTech SE | Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. SIVERS SEMICONDUCTORS AB |
| JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. Japan Tobacco |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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