Correlation Between JAPAN TOBACCO and COSMOSTEEL HLDGS
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS, you can compare the effects of market volatilities on JAPAN TOBACCO and COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and COSMOSTEEL HLDGS.
Diversification Opportunities for JAPAN TOBACCO and COSMOSTEEL HLDGS
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAPAN and COSMOSTEEL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and COSMOSTEEL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMOSTEEL HLDGS has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and COSMOSTEEL HLDGS go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and COSMOSTEEL HLDGS
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.57 times more return on investment than COSMOSTEEL HLDGS. However, JAPAN TOBACCO UNSPADR12 is 1.76 times less risky than COSMOSTEEL HLDGS. It trades about 0.06 of its potential returns per unit of risk. COSMOSTEEL HLDGS is currently generating about -0.01 per unit of risk. If you would invest 838.00 in JAPAN TOBACCO UNSPADR12 on August 27, 2024 and sell it today you would earn a total of 402.00 from holding JAPAN TOBACCO UNSPADR12 or generate 47.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. COSMOSTEEL HLDGS
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| COSMOSTEEL HLDGS |
JAPAN TOBACCO and COSMOSTEEL HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and COSMOSTEEL HLDGS
The main advantage of trading using opposite JAPAN TOBACCO and COSMOSTEEL HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS will offset losses from the drop in COSMOSTEEL HLDGS's long position.| JAPAN TOBACCO vs. Burlington Stores | JAPAN TOBACCO vs. SWISS WATER DECAFFCOFFEE | JAPAN TOBACCO vs. FAST RETAIL ADR | JAPAN TOBACCO vs. Darden Restaurants |
| COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Microsoft |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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