Correlation Between JAPAN TOBACCO and Peijia Medical
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Peijia Medical 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 Peijia Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN TOBACCO UNSPADR12 and Peijia Medical Limited, you can compare the effects of market volatilities on JAPAN TOBACCO and Peijia Medical 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 Peijia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Peijia Medical.
Diversification Opportunities for JAPAN TOBACCO and Peijia Medical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between JAPAN and Peijia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Peijia Medical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peijia Medical 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 UNSPADR12 are associated (or correlated) with Peijia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peijia Medical has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Peijia Medical go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Peijia Medical
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.49 times more return on investment than Peijia Medical. However, JAPAN TOBACCO UNSPADR12 is 2.05 times less risky than Peijia Medical. It trades about -0.07 of its potential returns per unit of risk. Peijia Medical Limited is currently generating about -0.18 per unit of risk. If you would invest 1,200 in JAPAN TOBACCO UNSPADR12 on November 6, 2024 and sell it today you would lose (20.00) from holding JAPAN TOBACCO UNSPADR12 or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. Peijia Medical Limited
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Peijia Medical |
JAPAN TOBACCO and Peijia Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Peijia Medical
The main advantage of trading using opposite JAPAN TOBACCO and Peijia Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Peijia Medical 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 Peijia Medical will offset losses from the drop in Peijia Medical's long position.| JAPAN TOBACCO vs. GLG LIFE TECH | JAPAN TOBACCO vs. Addtech AB | JAPAN TOBACCO vs. Firan Technology Group | JAPAN TOBACCO vs. Agilent Technologies |
| Peijia Medical vs. Abbott Laboratories | Peijia Medical vs. Abbott Laboratories | Peijia Medical vs. Medtronic PLC | Peijia Medical vs. Stryker |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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