Correlation Between Austevoll Seafood and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Austevoll Seafood and Japan Tobacco 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 Austevoll Seafood and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austevoll Seafood ASA and Japan Tobacco, you can compare the effects of market volatilities on Austevoll Seafood and Japan Tobacco 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 Austevoll Seafood with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austevoll Seafood and Japan Tobacco.
Diversification Opportunities for Austevoll Seafood and Japan Tobacco
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Austevoll and Japan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and Austevoll Seafood 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 Austevoll Seafood ASA are associated (or correlated) with Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Japan Tobacco go up and down completely randomly.
Pair Corralation between Austevoll Seafood and Japan Tobacco
Assuming the 90 days horizon Austevoll Seafood ASA is expected to generate 3.46 times more return on investment than Japan Tobacco. However, Austevoll Seafood is 3.46 times more volatile than Japan Tobacco. It trades about 0.04 of its potential returns per unit of risk. Japan Tobacco is currently generating about 0.04 per unit of risk. If you would invest 391.00 in Austevoll Seafood ASA on September 28, 2024 and sell it today you would earn a total of 414.00 from holding Austevoll Seafood ASA or generate 105.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austevoll Seafood ASA vs. Japan Tobacco
Performance |
| Timeline |
| Austevoll Seafood ASA |
| Japan Tobacco |
Austevoll Seafood and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austevoll Seafood and Japan Tobacco
The main advantage of trading using opposite Austevoll Seafood and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austevoll Seafood position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco's long position.| Austevoll Seafood vs. Archer Daniels Midland | Austevoll Seafood vs. Tyson Foods | Austevoll Seafood vs. MOWI ASA SPADR | Austevoll Seafood vs. Mowi ASA |
| Japan Tobacco vs. Perseus Mining Limited | Japan Tobacco vs. Astral Foods Limited | Japan Tobacco vs. TYSON FOODS A | Japan Tobacco vs. Austevoll Seafood ASA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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