Correlation Between Japan Tobacco and Global Ship
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Global Ship 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 Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and Global Ship Lease, you can compare the effects of market volatilities on Japan Tobacco and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Global Ship.
Diversification Opportunities for Japan Tobacco and Global Ship
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and Global is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Global Ship go up and down completely randomly.
Pair Corralation between Japan Tobacco and Global Ship
Assuming the 90 days horizon Japan Tobacco is expected to generate 1.3 times less return on investment than Global Ship. But when comparing it to its historical volatility, Japan Tobacco is 1.09 times less risky than Global Ship. It trades about 0.04 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,399 in Global Ship Lease on September 2, 2024 and sell it today you would earn a total of 633.00 from holding Global Ship Lease or generate 45.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. Global Ship Lease
Performance |
| Timeline |
| Japan Tobacco |
| Global Ship Lease |
Japan Tobacco and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Global Ship
The main advantage of trading using opposite Japan Tobacco and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| Japan Tobacco vs. Datadog | Japan Tobacco vs. Science Applications International | Japan Tobacco vs. United Natural Foods | Japan Tobacco vs. Astral Foods Limited |
| Global Ship vs. Wilh Wilhelmsen Holding | Global Ship vs. Superior Plus Corp | Global Ship vs. NMI Holdings | Global Ship vs. Origin Agritech |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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