Correlation Between JD SPORTS and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both JD SPORTS 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 JD SPORTS and Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD SPORTS FASH and Japan Tobacco, you can compare the effects of market volatilities on JD SPORTS 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 JD SPORTS with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Japan Tobacco.
Diversification Opportunities for JD SPORTS and Japan Tobacco
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 9JD and Japan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and JD SPORTS 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 JD SPORTS FASH 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 JD SPORTS i.e., JD SPORTS and Japan Tobacco go up and down completely randomly.
Pair Corralation between JD SPORTS and Japan Tobacco
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Japan Tobacco. In addition to that, JD SPORTS is 2.04 times more volatile than Japan Tobacco. It trades about -0.03 of its total potential returns per unit of risk. Japan Tobacco is currently generating about 0.02 per unit of volatility. If you would invest 2,253 in Japan Tobacco on December 8, 2024 and sell it today you would earn a total of 148.00 from holding Japan Tobacco or generate 6.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
JD SPORTS FASH vs. Japan Tobacco
Performance |
Timeline |
JD SPORTS FASH |
Japan Tobacco |
JD SPORTS and Japan Tobacco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD SPORTS and Japan Tobacco
The main advantage of trading using opposite JD SPORTS and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS 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.JD SPORTS vs. Universal Insurance Holdings | JD SPORTS vs. ZhongAn Online P | JD SPORTS vs. New China Life | JD SPORTS vs. Zurich Insurance Group |
Japan Tobacco vs. USU Software AG | Japan Tobacco vs. Molina Healthcare | Japan Tobacco vs. CyberArk Software | Japan Tobacco vs. Axway Software SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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