Correlation Between Japan Tobacco and Ito En
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Ito En 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 Ito En 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 Ito En, you can compare the effects of market volatilities on Japan Tobacco and Ito En 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 Ito En. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Ito En.
Diversification Opportunities for Japan Tobacco and Ito En
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Japan and Ito is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and Ito En in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ito En 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 Ito En. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ito En has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Ito En go up and down completely randomly.
Pair Corralation between Japan Tobacco and Ito En
If you would invest 1,263 in Japan Tobacco ADR on September 14, 2024 and sell it today you would earn a total of 115.00 from holding Japan Tobacco ADR or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.37% |
| Values | Daily Returns |
Japan Tobacco ADR vs. Ito En
Performance |
| Timeline |
| Japan Tobacco ADR |
| Ito En |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Japan Tobacco and Ito En Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Ito En
The main advantage of trading using opposite Japan Tobacco and Ito En positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Ito En 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 Ito En will offset losses from the drop in Ito En'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 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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