Correlation Between Japan Tobacco and STRAX AB
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and STRAX AB 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 STRAX AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and STRAX AB SK, you can compare the effects of market volatilities on Japan Tobacco and STRAX AB 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 STRAX AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and STRAX AB.
Diversification Opportunities for Japan Tobacco and STRAX AB
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Japan and STRAX is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and STRAX AB SK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAX AB SK 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 STRAX AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAX AB SK has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and STRAX AB go up and down completely randomly.
Pair Corralation between Japan Tobacco and STRAX AB
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.27 times more return on investment than STRAX AB. However, Japan Tobacco is 3.64 times less risky than STRAX AB. It trades about -0.14 of its potential returns per unit of risk. STRAX AB SK is currently generating about -0.27 per unit of risk. If you would invest 2,500 in Japan Tobacco on October 22, 2024 and sell it today you would lose (106.00) from holding Japan Tobacco or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. STRAX AB SK
Performance |
| Timeline |
| Japan Tobacco |
| STRAX AB SK |
Japan Tobacco and STRAX AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and STRAX AB
The main advantage of trading using opposite Japan Tobacco and STRAX AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, STRAX AB 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 STRAX AB will offset losses from the drop in STRAX AB's long position.| Japan Tobacco vs. Geely Automobile Holdings | Japan Tobacco vs. Ribbon Communications | Japan Tobacco vs. MOBILE FACTORY INC | Japan Tobacco vs. T MOBILE US |
| STRAX AB vs. MINCO SILVER | STRAX AB vs. MCEWEN MINING INC | STRAX AB vs. De Grey Mining | STRAX AB vs. Japan Tobacco |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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