Correlation Between JAPAN TOBACCO and KENEDIX OFFICE
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and KENEDIX OFFICE 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 KENEDIX OFFICE 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 KENEDIX OFFICE INV, you can compare the effects of market volatilities on JAPAN TOBACCO and KENEDIX OFFICE 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 KENEDIX OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and KENEDIX OFFICE.
Diversification Opportunities for JAPAN TOBACCO and KENEDIX OFFICE
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JAPAN and KENEDIX is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV 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 KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and KENEDIX OFFICE go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and KENEDIX OFFICE
Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 1.56 times less return on investment than KENEDIX OFFICE. In addition to that, JAPAN TOBACCO is 1.04 times more volatile than KENEDIX OFFICE INV. It trades about 0.07 of its total potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about 0.11 per unit of volatility. If you would invest 87,500 in KENEDIX OFFICE INV on August 30, 2024 and sell it today you would earn a total of 3,500 from holding KENEDIX OFFICE INV or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. KENEDIX OFFICE INV
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| KENEDIX OFFICE INV |
JAPAN TOBACCO and KENEDIX OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and KENEDIX OFFICE
The main advantage of trading using opposite JAPAN TOBACCO and KENEDIX OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, KENEDIX OFFICE 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 KENEDIX OFFICE will offset losses from the drop in KENEDIX OFFICE's long position.| JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. Superior Plus Corp | JAPAN TOBACCO vs. NMI Holdings | JAPAN TOBACCO vs. SIVERS SEMICONDUCTORS AB |
| KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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