Correlation Between Japan Tobacco and VARIOUS EATERIES
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and VARIOUS EATERIES 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 VARIOUS EATERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and VARIOUS EATERIES LS, you can compare the effects of market volatilities on Japan Tobacco and VARIOUS EATERIES 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 VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and VARIOUS EATERIES.
Diversification Opportunities for Japan Tobacco and VARIOUS EATERIES
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japan and VARIOUS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES 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 VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and VARIOUS EATERIES go up and down completely randomly.
Pair Corralation between Japan Tobacco and VARIOUS EATERIES
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.22 times more return on investment than VARIOUS EATERIES. However, Japan Tobacco is 4.45 times less risky than VARIOUS EATERIES. It trades about -0.1 of its potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about -0.18 per unit of risk. If you would invest 2,451 in Japan Tobacco on November 30, 2024 and sell it today you would lose (84.00) from holding Japan Tobacco or give up 3.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Japan Tobacco vs. VARIOUS EATERIES LS
Performance |
Timeline |
Japan Tobacco |
VARIOUS EATERIES |
Japan Tobacco and VARIOUS EATERIES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Japan Tobacco and VARIOUS EATERIES
The main advantage of trading using opposite Japan Tobacco and VARIOUS EATERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, VARIOUS EATERIES 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 VARIOUS EATERIES will offset losses from the drop in VARIOUS EATERIES's long position.Japan Tobacco vs. GAZTRTECHNIUADR15EO01 | ||
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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