Correlation Between Japan Tobacco and Platinum Group
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and Platinum Group 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 Platinum Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and Platinum Group Metals, you can compare the effects of market volatilities on Japan Tobacco and Platinum Group 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 Platinum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Platinum Group.
Diversification Opportunities for Japan Tobacco and Platinum Group
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Platinum is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals 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 Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Platinum Group go up and down completely randomly.
Pair Corralation between Japan Tobacco and Platinum Group
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.38 times more return on investment than Platinum Group. However, Japan Tobacco is 2.65 times less risky than Platinum Group. It trades about 0.0 of its potential returns per unit of risk. Platinum Group Metals is currently generating about -0.01 per unit of risk. If you would invest 2,466 in Japan Tobacco on November 4, 2024 and sell it today you would lose (7.00) from holding Japan Tobacco or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. Platinum Group Metals
Performance |
| Timeline |
| Japan Tobacco |
| Platinum Group Metals |
Japan Tobacco and Platinum Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Platinum Group
The main advantage of trading using opposite Japan Tobacco and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, Platinum Group 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 Platinum Group will offset losses from the drop in Platinum Group's long position.| Japan Tobacco vs. THRACE PLASTICS | Japan Tobacco vs. Rayonier Advanced Materials | Japan Tobacco vs. Sumitomo Rubber Industries | Japan Tobacco vs. The Yokohama Rubber |
| Platinum Group vs. SINGAPORE AIRLINES | Platinum Group vs. JAPAN AIRLINES | Platinum Group vs. Aya Gold Silver | Platinum Group vs. Ultra Clean Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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