Correlation Between JAPAN TOBACCO and OPERA SOFTWARE
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and OPERA SOFTWARE 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 OPERA SOFTWARE 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 OPERA SOFTWARE, you can compare the effects of market volatilities on JAPAN TOBACCO and OPERA SOFTWARE 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 OPERA SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and OPERA SOFTWARE.
Diversification Opportunities for JAPAN TOBACCO and OPERA SOFTWARE
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAPAN and OPERA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and OPERA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERA SOFTWARE 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 OPERA SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERA SOFTWARE has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and OPERA SOFTWARE go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and OPERA SOFTWARE
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to under-perform the OPERA SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN TOBACCO UNSPADR12 is 1.02 times less risky than OPERA SOFTWARE. The stock trades about -0.29 of its potential returns per unit of risk. The OPERA SOFTWARE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 64.00 in OPERA SOFTWARE on October 11, 2024 and sell it today you would earn a total of 1.00 from holding OPERA SOFTWARE or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. OPERA SOFTWARE
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| OPERA SOFTWARE |
JAPAN TOBACCO and OPERA SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and OPERA SOFTWARE
The main advantage of trading using opposite JAPAN TOBACCO and OPERA SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, OPERA SOFTWARE 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 OPERA SOFTWARE will offset losses from the drop in OPERA SOFTWARE's long position.| JAPAN TOBACCO vs. Zoom Video Communications | JAPAN TOBACCO vs. 24SEVENOFFICE GROUP AB | JAPAN TOBACCO vs. Kingdee International Software | JAPAN TOBACCO vs. GEAR4MUSIC LS 10 |
| OPERA SOFTWARE vs. UNIQA INSURANCE GR | OPERA SOFTWARE vs. ZURICH INSURANCE GROUP | OPERA SOFTWARE vs. CARDINAL HEALTH | OPERA SOFTWARE vs. INSURANCE AUST GRP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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