Correlation Between IMPERIAL TOBACCO and PLANETREE INTLDEVHD
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and PLANETREE INTLDEVHD 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 PLANETREE INTLDEVHD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and PLANETREE INTLDEVHD 10, you can compare the effects of market volatilities on IMPERIAL TOBACCO and PLANETREE INTLDEVHD 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 PLANETREE INTLDEVHD. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and PLANETREE INTLDEVHD.
Diversification Opportunities for IMPERIAL TOBACCO and PLANETREE INTLDEVHD
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IMPERIAL and PLANETREE is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and PLANETREE INTLDEVHD 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLANETREE INTLDEVHD 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 PLANETREE INTLDEVHD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLANETREE INTLDEVHD has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and PLANETREE INTLDEVHD go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and PLANETREE INTLDEVHD
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to under-perform the PLANETREE INTLDEVHD. But the stock apears to be less risky and, when comparing its historical volatility, IMPERIAL TOBACCO is 7.83 times less risky than PLANETREE INTLDEVHD. The stock trades about -0.06 of its potential returns per unit of risk. The PLANETREE INTLDEVHD 10 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2.30 in PLANETREE INTLDEVHD 10 on October 20, 2024 and sell it today you would lose (0.05) from holding PLANETREE INTLDEVHD 10 or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. PLANETREE INTLDEVHD 10
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| PLANETREE INTLDEVHD |
IMPERIAL TOBACCO and PLANETREE INTLDEVHD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and PLANETREE INTLDEVHD
The main advantage of trading using opposite IMPERIAL TOBACCO and PLANETREE INTLDEVHD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, PLANETREE INTLDEVHD 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 PLANETREE INTLDEVHD will offset losses from the drop in PLANETREE INTLDEVHD's long position.| IMPERIAL TOBACCO vs. CN DATANG C | IMPERIAL TOBACCO vs. INFORMATION SVC GRP | IMPERIAL TOBACCO vs. Information Services International Dentsu | IMPERIAL TOBACCO vs. Northern Data AG |
| PLANETREE INTLDEVHD vs. Jacquet Metal Service | PLANETREE INTLDEVHD vs. Minerals Technologies | PLANETREE INTLDEVHD vs. Harmony Gold Mining | PLANETREE INTLDEVHD vs. GREENX METALS LTD |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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