Correlation Between Japan Tobacco and China Tontine
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and China Tontine 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 China Tontine 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 China Tontine Wines, you can compare the effects of market volatilities on Japan Tobacco and China Tontine 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 China Tontine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and China Tontine.
Diversification Opportunities for Japan Tobacco and China Tontine
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Japan and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and China Tontine Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Tontine Wines 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 China Tontine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Tontine Wines has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and China Tontine go up and down completely randomly.
Pair Corralation between Japan Tobacco and China Tontine
If you would invest 1,333 in Japan Tobacco ADR on September 15, 2024 and sell it today you would earn a total of 43.00 from holding Japan Tobacco ADR or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Japan Tobacco ADR vs. China Tontine Wines
Performance |
| Timeline |
| Japan Tobacco ADR |
| China Tontine Wines |
Japan Tobacco and China Tontine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and China Tontine
The main advantage of trading using opposite Japan Tobacco and China Tontine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, China Tontine 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 China Tontine will offset losses from the drop in China Tontine'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 |
| China Tontine vs. Japan Tobacco ADR | China Tontine vs. The Coca Cola | China Tontine vs. Constellation Brands Class | China Tontine vs. Philip Morris International |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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