Correlation Between Japan Tobacco and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and AIR PRODCHEMICALS, you can compare the effects of market volatilities on Japan Tobacco and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and AIR PRODCHEMICALS.
Diversification Opportunities for Japan Tobacco and AIR PRODCHEMICALS
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and AIR is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between Japan Tobacco and AIR PRODCHEMICALS
Assuming the 90 days horizon Japan Tobacco is expected to generate 2.94 times less return on investment than AIR PRODCHEMICALS. In addition to that, Japan Tobacco is 1.51 times more volatile than AIR PRODCHEMICALS. It trades about 0.09 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.42 per unit of volatility. If you would invest 28,740 in AIR PRODCHEMICALS on September 1, 2024 and sell it today you would earn a total of 2,890 from holding AIR PRODCHEMICALS or generate 10.06% 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. AIR PRODCHEMICALS
Performance |
| Timeline |
| Japan Tobacco |
| AIR PRODCHEMICALS |
Japan Tobacco and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and AIR PRODCHEMICALS
The main advantage of trading using opposite Japan Tobacco and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| Japan Tobacco vs. Performance Food Group | Japan Tobacco vs. JJ SNACK FOODS | Japan Tobacco vs. MUTUIONLINE | Japan Tobacco vs. LIFEWAY FOODS |
| AIR PRODCHEMICALS vs. SIVERS SEMICONDUCTORS AB | AIR PRODCHEMICALS vs. Darden Restaurants | AIR PRODCHEMICALS vs. Reliance Steel Aluminum | AIR PRODCHEMICALS vs. Q2M Managementberatung AG |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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