Correlation Between Japan Tobacco and ALIBABA
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By analyzing existing cross correlation between Japan Tobacco ADR and ALIBABA GROUP HLDG, you can compare the effects of market volatilities on Japan Tobacco and ALIBABA 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 ALIBABA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and ALIBABA.
Diversification Opportunities for Japan Tobacco and ALIBABA
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japan and ALIBABA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco ADR and ALIBABA GROUP HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIBABA GROUP HLDG 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 ALIBABA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALIBABA GROUP HLDG has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and ALIBABA go up and down completely randomly.
Pair Corralation between Japan Tobacco and ALIBABA
Assuming the 90 days horizon Japan Tobacco ADR is expected to generate 1.26 times more return on investment than ALIBABA. However, Japan Tobacco is 1.26 times more volatile than ALIBABA GROUP HLDG. It trades about 0.06 of its potential returns per unit of risk. ALIBABA GROUP HLDG is currently generating about -0.19 per unit of risk. If you would invest 1,343 in Japan Tobacco ADR on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Japan Tobacco ADR or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Japan Tobacco ADR vs. ALIBABA GROUP HLDG
Performance |
| Timeline |
| Japan Tobacco ADR |
| ALIBABA GROUP HLDG |
Japan Tobacco and ALIBABA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and ALIBABA
The main advantage of trading using opposite Japan Tobacco and ALIBABA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, ALIBABA 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 ALIBABA will offset losses from the drop in ALIBABA's long position.| Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Turning Point Brands |
| ALIBABA vs. AEP TEX INC | ALIBABA vs. US BANK NATIONAL | ALIBABA vs. Omega Healthcare Investors | ALIBABA vs. Zoom Video Communications |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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