Correlation Between Japan Tobacco and Roma Green
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Roma Green 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 Roma Green 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 Roma Green Finance, you can compare the effects of market volatilities on Japan Tobacco and Roma Green 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 Roma Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Roma Green.
Diversification Opportunities for Japan Tobacco and Roma Green
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Roma is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Roma Green go up and down completely randomly.
Pair Corralation between Japan Tobacco and Roma Green
Assuming the 90 days horizon Japan Tobacco ADR is expected to generate 0.3 times more return on investment than Roma Green. However, Japan Tobacco ADR is 3.31 times less risky than Roma Green. It trades about -0.22 of its potential returns per unit of risk. Roma Green Finance is currently generating about -0.28 per unit of risk. If you would invest 1,312 in Japan Tobacco ADR on October 23, 2024 and sell it today you would lose (69.00) from holding Japan Tobacco ADR or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco ADR vs. Roma Green Finance
Performance |
| Timeline |
| Japan Tobacco ADR |
| Roma Green Finance |
Japan Tobacco and Roma Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Roma Green
The main advantage of trading using opposite Japan Tobacco and Roma Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Roma Green 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 Roma Green will offset losses from the drop in Roma Green'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 |
| Roma Green vs. Boston Beer | Roma Green vs. RadNet Inc | Roma Green vs. Japan Tobacco ADR | Roma Green vs. Catalyst Pharmaceuticals |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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