Correlation Between Japan Tobacco and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Haier Smart 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 Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and Haier Smart Home, you can compare the effects of market volatilities on Japan Tobacco and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Haier Smart.
Diversification Opportunities for Japan Tobacco and Haier Smart
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Japan and Haier is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Haier Smart go up and down completely randomly.
Pair Corralation between Japan Tobacco and Haier Smart
Assuming the 90 days horizon Japan Tobacco is expected to under-perform the Haier Smart. But the stock apears to be less risky and, when comparing its historical volatility, Japan Tobacco is 1.13 times less risky than Haier Smart. The stock trades about -0.03 of its potential returns per unit of risk. The Haier Smart Home is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Haier Smart Home on October 24, 2024 and sell it today you would earn a total of 2.00 from holding Haier Smart Home or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. Haier Smart Home
Performance |
| Timeline |
| Japan Tobacco |
| Haier Smart Home |
Japan Tobacco and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Haier Smart
The main advantage of trading using opposite Japan Tobacco and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| Japan Tobacco vs. ADDUS HOMECARE | Japan Tobacco vs. BRIT AMER TOBACCO | Japan Tobacco vs. MCEWEN MINING INC | Japan Tobacco vs. KENEDIX OFFICE INV |
| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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