Correlation Between REVO INSURANCE and JAPAN TOBACCO

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Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and JAPAN TOBACCO.

Diversification Opportunities for REVO INSURANCE and JAPAN TOBACCO

REVOJAPANDiversified AwayREVOJAPANDiversified Away100%
-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between REVO and JAPAN is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA 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 REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and JAPAN TOBACCO go up and down completely randomly.

Pair Corralation between REVO INSURANCE and JAPAN TOBACCO

Assuming the 90 days horizon REVO INSURANCE SPA is expected to generate 0.86 times more return on investment than JAPAN TOBACCO. However, REVO INSURANCE SPA is 1.16 times less risky than JAPAN TOBACCO. It trades about 0.09 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.01 per unit of risk. If you would invest  855.00  in REVO INSURANCE SPA on November 21, 2024 and sell it today you would earn a total of  295.00  from holding REVO INSURANCE SPA or generate 34.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

REVO INSURANCE SPA  vs.  JAPAN TOBACCO UNSPADR12

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510152025
JavaScript chart by amCharts 3.21.15H0O JATA
       Timeline  
REVO INSURANCE SPA 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in REVO INSURANCE SPA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REVO INSURANCE may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.51111.51212.513
JAPAN TOBACCO UNSPADR12 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days JAPAN TOBACCO UNSPADR12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.411.611.81212.212.412.612.813

REVO INSURANCE and JAPAN TOBACCO Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.21-5.4-3.59-1.78-0.03021.863.745.637.52 0.050.100.150.20
JavaScript chart by amCharts 3.21.15H0O JATA
       Returns  

Pair Trading with REVO INSURANCE and JAPAN TOBACCO

The main advantage of trading using opposite REVO INSURANCE and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.
The idea behind REVO INSURANCE SPA and JAPAN TOBACCO UNSPADR12 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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