Correlation Between Japan Tobacco and ABERFORTH SMCOS
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and ABERFORTH SMCOS 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 ABERFORTH SMCOS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on Japan Tobacco and ABERFORTH SMCOS 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 ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and ABERFORTH SMCOS.
Diversification Opportunities for Japan Tobacco and ABERFORTH SMCOS
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Japan and ABERFORTH is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS 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 are associated (or correlated) with ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and ABERFORTH SMCOS go up and down completely randomly.
Pair Corralation between Japan Tobacco and ABERFORTH SMCOS
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.96 times more return on investment than ABERFORTH SMCOS. However, Japan Tobacco is 1.04 times less risky than ABERFORTH SMCOS. It trades about -0.07 of its potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about -0.11 per unit of risk. If you would invest 2,516 in Japan Tobacco on November 6, 2024 and sell it today you would lose (61.00) from holding Japan Tobacco or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. ABERFORTH SMCOS TRLS 01
Performance |
| Timeline |
| Japan Tobacco |
| ABERFORTH SMCOS TRLS |
Japan Tobacco and ABERFORTH SMCOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and ABERFORTH SMCOS
The main advantage of trading using opposite Japan Tobacco and ABERFORTH SMCOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, ABERFORTH SMCOS 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 ABERFORTH SMCOS will offset losses from the drop in ABERFORTH SMCOS's long position.| Japan Tobacco vs. UPDATE SOFTWARE | Japan Tobacco vs. ECHO INVESTMENT ZY | Japan Tobacco vs. HK Electric Investments | Japan Tobacco vs. PKSHA TECHNOLOGY INC |
| ABERFORTH SMCOS vs. Solstad Offshore ASA | ABERFORTH SMCOS vs. EIDESVIK OFFSHORE NK | ABERFORTH SMCOS vs. Sims Metal Management | ABERFORTH SMCOS vs. Universal Health Realty |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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