Correlation Between JAPAN TOBACCO and Ontex Group
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Ontex Group 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 Ontex Group 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 Ontex Group NV, you can compare the effects of market volatilities on JAPAN TOBACCO and Ontex Group 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 Ontex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Ontex Group.
Diversification Opportunities for JAPAN TOBACCO and Ontex Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JAPAN and Ontex is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Ontex Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontex Group NV 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 Ontex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontex Group NV has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Ontex Group go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Ontex Group
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 1.08 times more return on investment than Ontex Group. However, JAPAN TOBACCO is 1.08 times more volatile than Ontex Group NV. It trades about 0.04 of its potential returns per unit of risk. Ontex Group NV is currently generating about 0.03 per unit of risk. If you would invest 1,126 in JAPAN TOBACCO UNSPADR12 on September 3, 2024 and sell it today you would earn a total of 154.00 from holding JAPAN TOBACCO UNSPADR12 or generate 13.68% 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. Ontex Group NV
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Ontex Group NV |
JAPAN TOBACCO and Ontex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Ontex Group
The main advantage of trading using opposite JAPAN TOBACCO and Ontex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO position performs unexpectedly, Ontex Group 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 Ontex Group will offset losses from the drop in Ontex Group's long position.| JAPAN TOBACCO vs. Apollo Investment Corp | JAPAN TOBACCO vs. Chuangs China Investments | JAPAN TOBACCO vs. Gladstone Investment | JAPAN TOBACCO vs. REGAL ASIAN INVESTMENTS |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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