Correlation Between JAPAN TOBACCO and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and GOLD ROAD 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 GOLD ROAD 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 GOLD ROAD RES, you can compare the effects of market volatilities on JAPAN TOBACCO and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and GOLD ROAD.
Diversification Opportunities for JAPAN TOBACCO and GOLD ROAD
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JAPAN and GOLD is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and GOLD ROAD go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and GOLD ROAD
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to under-perform the GOLD ROAD. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN TOBACCO UNSPADR12 is 1.57 times less risky than GOLD ROAD. The stock trades about -0.1 of its potential returns per unit of risk. The GOLD ROAD RES is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 107.00 in GOLD ROAD RES on October 14, 2024 and sell it today you would earn a total of 22.00 from holding GOLD ROAD RES or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. GOLD ROAD RES
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| GOLD ROAD RES |
JAPAN TOBACCO and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and GOLD ROAD
The main advantage of trading using opposite JAPAN TOBACCO and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| JAPAN TOBACCO vs. Luckin Coffee | JAPAN TOBACCO vs. BE Semiconductor Industries | JAPAN TOBACCO vs. Siamgas And Petrochemicals | JAPAN TOBACCO vs. COFCO Joycome Foods |
| GOLD ROAD vs. MOVIE GAMES SA | GOLD ROAD vs. PLAYTECH | GOLD ROAD vs. JAPAN TOBACCO UNSPADR12 | GOLD ROAD vs. British American 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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