Correlation Between Japan Tobacco and TROPHY GAMES
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and TROPHY GAMES 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 TROPHY GAMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and TROPHY GAMES DEV, you can compare the effects of market volatilities on Japan Tobacco and TROPHY GAMES 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 TROPHY GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and TROPHY GAMES.
Diversification Opportunities for Japan Tobacco and TROPHY GAMES
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and TROPHY is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and TROPHY GAMES DEV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TROPHY GAMES DEV 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 TROPHY GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TROPHY GAMES DEV has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and TROPHY GAMES go up and down completely randomly.
Pair Corralation between Japan Tobacco and TROPHY GAMES
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.45 times more return on investment than TROPHY GAMES. However, Japan Tobacco is 2.2 times less risky than TROPHY GAMES. It trades about 0.15 of its potential returns per unit of risk. TROPHY GAMES DEV is currently generating about -0.05 per unit of risk. If you would invest 2,536 in Japan Tobacco on September 12, 2024 and sell it today you would earn a total of 114.00 from holding Japan Tobacco or generate 4.5% 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. TROPHY GAMES DEV
Performance |
| Timeline |
| Japan Tobacco |
| TROPHY GAMES DEV |
Japan Tobacco and TROPHY GAMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and TROPHY GAMES
The main advantage of trading using opposite Japan Tobacco and TROPHY GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, TROPHY GAMES 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 TROPHY GAMES will offset losses from the drop in TROPHY GAMES's long position.| Japan Tobacco vs. TEXAS ROADHOUSE | Japan Tobacco vs. COPLAND ROAD CAPITAL | Japan Tobacco vs. QUEEN S ROAD | Japan Tobacco vs. Kaufman Broad SA |
| TROPHY GAMES vs. BLUESCOPE STEEL | TROPHY GAMES vs. Science Applications International | TROPHY GAMES vs. RELIANCE STEEL AL | TROPHY GAMES vs. Nippon Steel |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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