Correlation Between Grand Havana and Ajinomoto

Can any of the company-specific risk be diversified away by investing in both Grand Havana and Ajinomoto 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 Grand Havana and Ajinomoto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grand Havana and Ajinomoto Co ADR, you can compare the effects of market volatilities on Grand Havana and Ajinomoto 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 Grand Havana with a short position of Ajinomoto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Havana and Ajinomoto.

Diversification Opportunities for Grand Havana and Ajinomoto

-0.07

Correlation Coefficient

Grand Havana  Ajinomoto

Good diversification

The 3 months correlation between Grand and Ajinomoto is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Grand Havana and Ajinomoto Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajinomoto Co ADR and Grand Havana 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 Grand Havana are associated (or correlated) with Ajinomoto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajinomoto Co ADR has no effect on the direction of Grand Havana i.e., Grand Havana and Ajinomoto go up and down completely randomly.

Pair Corralation between Grand Havana and Ajinomoto

Given the investment horizon of 90 days Grand Havana is expected to under-perform the Ajinomoto. In addition to that, Grand Havana is 4.7 times more volatile than Ajinomoto Co ADR. It trades about -0.18 of its total potential returns per unit of risk. Ajinomoto Co ADR is currently generating about -0.14 per unit of volatility. If you would invest  4,264  in Ajinomoto Co ADR on October 1, 2024 and sell it today you would lose (190.00) from holding Ajinomoto Co ADR or give up 4.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Grand Havana  vs.  Ajinomoto Co ADR

Grand Havana

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Havana are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Grand Havana showed solid returns over the last few months and may actually be approaching a breakup point.

Ajinomoto Co ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ajinomoto Co ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Ajinomoto may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grand Havana and Ajinomoto

The main advantage of trading using opposite Grand Havana and Ajinomoto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Havana position performs unexpectedly, Ajinomoto 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 Ajinomoto will offset losses from the drop in Ajinomoto's long position.

The idea behind Grand Havana and Ajinomoto Co ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.