Correlation Between FARM 51 and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and JAPAN TOBACCO.
Diversification Opportunities for FARM 51 and JAPAN TOBACCO
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARM and JAPAN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP 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 FARM 51 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 FARM 51 GROUP 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 FARM 51 i.e., FARM 51 and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between FARM 51 and JAPAN TOBACCO
Assuming the 90 days horizon FARM 51 GROUP is expected to under-perform the JAPAN TOBACCO. In addition to that, FARM 51 is 1.83 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about -0.02 of its total potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.05 per unit of volatility. If you would invest 852.00 in JAPAN TOBACCO UNSPADR12 on October 13, 2024 and sell it today you would earn a total of 308.00 from holding JAPAN TOBACCO UNSPADR12 or generate 36.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| FARM 51 GROUP |
| JAPAN TOBACCO UNSPADR12 |
FARM 51 and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and JAPAN TOBACCO
The main advantage of trading using opposite FARM 51 and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.| FARM 51 vs. ENVVENO MEDICAL DL 00001 | FARM 51 vs. Peijia Medical Limited | FARM 51 vs. SAN MIGUEL BREWERY | FARM 51 vs. China Resources Beer |
| JAPAN TOBACCO vs. FARM 51 GROUP | JAPAN TOBACCO vs. Reinsurance Group of | JAPAN TOBACCO vs. ZURICH INSURANCE GROUP | JAPAN TOBACCO vs. Singapore Reinsurance |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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