Correlation Between Japan Tobacco and AdTheorent Holding
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and AdTheorent Holding 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 Japan Tobacco and AdTheorent Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco ADR and AdTheorent Holding, you can compare the effects of market volatilities on Japan Tobacco and AdTheorent Holding 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 Japan Tobacco with a short position of AdTheorent Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and AdTheorent Holding.
Diversification Opportunities for Japan Tobacco and AdTheorent Holding
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and AdTheorent is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and AdTheorent Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdTheorent Holding and Japan 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 Japan Tobacco ADR are associated (or correlated) with AdTheorent Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdTheorent Holding has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and AdTheorent Holding go up and down completely randomly.
Pair Corralation between Japan Tobacco and AdTheorent Holding
Assuming the 90 days horizon Japan Tobacco is expected to generate 5.14 times less return on investment than AdTheorent Holding. But when comparing it to its historical volatility, Japan Tobacco ADR is 3.61 times less risky than AdTheorent Holding. It trades about 0.06 of its potential returns per unit of risk. AdTheorent Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 166.00 in AdTheorent Holding on August 31, 2024 and sell it today you would earn a total of 154.00 from holding AdTheorent Holding or generate 92.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 69.97% |
| Values | Daily Returns |
Japan Tobacco ADR vs. AdTheorent Holding
Performance |
| Timeline |
| Japan Tobacco ADR |
| AdTheorent Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Japan Tobacco and AdTheorent Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and AdTheorent Holding
The main advantage of trading using opposite Japan Tobacco and AdTheorent Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, AdTheorent Holding 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 AdTheorent Holding will offset losses from the drop in AdTheorent Holding's long position.| Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco |
| AdTheorent Holding vs. Daily Journal Corp | AdTheorent Holding vs. Coursera | AdTheorent Holding vs. Relx PLC ADR | AdTheorent Holding vs. Zane Interactive Publishing |
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 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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