Correlation Between IMPERIAL TOBACCO and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Aozora Bank 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 IMPERIAL TOBACCO and Aozora Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Aozora Bank, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Aozora Bank 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 IMPERIAL TOBACCO with a short position of Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Aozora Bank.
Diversification Opportunities for IMPERIAL TOBACCO and Aozora Bank
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IMPERIAL and Aozora is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Aozora Bank go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Aozora Bank
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.66 times more return on investment than Aozora Bank. However, IMPERIAL TOBACCO is 1.52 times less risky than Aozora Bank. It trades about 0.23 of its potential returns per unit of risk. Aozora Bank is currently generating about -0.02 per unit of risk. If you would invest 2,613 in IMPERIAL TOBACCO on September 12, 2024 and sell it today you would earn a total of 494.00 from holding IMPERIAL TOBACCO or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Aozora Bank
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Aozora Bank |
IMPERIAL TOBACCO and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Aozora Bank
The main advantage of trading using opposite IMPERIAL TOBACCO and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| IMPERIAL TOBACCO vs. SLR Investment Corp | IMPERIAL TOBACCO vs. CyberArk Software | IMPERIAL TOBACCO vs. PennantPark Investment | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
| Aozora Bank vs. Agricultural Bank of | Aozora Bank vs. Commonwealth Bank of | Aozora Bank vs. Superior Plus Corp | Aozora Bank vs. SIVERS SEMICONDUCTORS AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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