Correlation Between Japan Tobacco and Greenlane Holdings
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Greenlane Holdings 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 Greenlane Holdings 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 Greenlane Holdings, you can compare the effects of market volatilities on Japan Tobacco and Greenlane Holdings 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 Greenlane Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Greenlane Holdings.
Diversification Opportunities for Japan Tobacco and Greenlane Holdings
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japan and Greenlane is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and Greenlane Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Holdings 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 Greenlane Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Holdings has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Greenlane Holdings go up and down completely randomly.
Pair Corralation between Japan Tobacco and Greenlane Holdings
Assuming the 90 days horizon Japan Tobacco ADR is expected to under-perform the Greenlane Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Japan Tobacco ADR is 17.82 times less risky than Greenlane Holdings. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Greenlane Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 225.00 in Greenlane Holdings on August 25, 2024 and sell it today you would lose (45.00) from holding Greenlane Holdings or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco ADR vs. Greenlane Holdings
Performance |
| Timeline |
| Japan Tobacco ADR |
| Greenlane Holdings |
Japan Tobacco and Greenlane Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Greenlane Holdings
The main advantage of trading using opposite Japan Tobacco and Greenlane Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Greenlane Holdings 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 Greenlane Holdings will offset losses from the drop in Greenlane Holdings' 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 |
| Greenlane Holdings vs. 1606 Corp | Greenlane Holdings vs. PT Hanjaya Mandala | Greenlane Holdings vs. Green Globe International | Greenlane Holdings vs. Kaival Brands Innovations |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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