Correlation Between Japan Tobacco and PT Gudang
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and PT Gudang 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 PT Gudang 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 PT Gudang Garam, you can compare the effects of market volatilities on Japan Tobacco and PT Gudang 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 PT Gudang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and PT Gudang.
Diversification Opportunities for Japan Tobacco and PT Gudang
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Japan and GGNPF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and PT Gudang Garam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gudang Garam 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 PT Gudang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gudang Garam has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and PT Gudang go up and down completely randomly.
Pair Corralation between Japan Tobacco and PT Gudang
Assuming the 90 days horizon Japan Tobacco ADR is expected to generate 0.42 times more return on investment than PT Gudang. However, Japan Tobacco ADR is 2.4 times less risky than PT Gudang. It trades about 0.06 of its potential returns per unit of risk. PT Gudang Garam is currently generating about -0.01 per unit of risk. If you would invest 1,044 in Japan Tobacco ADR on September 3, 2024 and sell it today you would earn a total of 364.00 from holding Japan Tobacco ADR or generate 34.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco ADR vs. PT Gudang Garam
Performance |
| Timeline |
| Japan Tobacco ADR |
| PT Gudang Garam |
Japan Tobacco and PT Gudang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and PT Gudang
The main advantage of trading using opposite Japan Tobacco and PT Gudang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, PT Gudang 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 PT Gudang will offset losses from the drop in PT Gudang'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 |
| PT Gudang vs. Kenon Holdings | PT Gudang vs. Evertz Technologies Limited | PT Gudang vs. Atmos Energy | PT Gudang vs. Arrow Electronics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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