Correlation Between JAPAN TOBACCO and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on JAPAN TOBACCO and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for JAPAN TOBACCO and AAC TECHNOLOGHLDGADR
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JAPAN and AAC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and AAC TECHNOLOGHLDGADR
Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 2.62 times less return on investment than AAC TECHNOLOGHLDGADR. But when comparing it to its historical volatility, JAPAN TOBACCO UNSPADR12 is 2.28 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.15 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 360.00 in AAC TECHNOLOGHLDGADR on September 1, 2024 and sell it today you would earn a total of 46.00 from holding AAC TECHNOLOGHLDGADR or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| AAC TECHNOLOGHLDGADR |
JAPAN TOBACCO and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite JAPAN TOBACCO and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| JAPAN TOBACCO vs. YATRA ONLINE DL 0001 | JAPAN TOBACCO vs. Austevoll Seafood ASA | JAPAN TOBACCO vs. NIPPON MEAT PACKERS | JAPAN TOBACCO vs. Tyson Foods |
| AAC TECHNOLOGHLDGADR vs. Motorola Solutions | AAC TECHNOLOGHLDGADR vs. Nokia | AAC TECHNOLOGHLDGADR vs. ZTE Corporation | AAC TECHNOLOGHLDGADR vs. Hewlett Packard Enterprise |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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