Correlation Between Japan Tobacco and COVIVIO HOTELS
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco and COVIVIO HOTELS 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 COVIVIO HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and COVIVIO HOTELS INH, you can compare the effects of market volatilities on Japan Tobacco and COVIVIO HOTELS 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 COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and COVIVIO HOTELS.
Diversification Opportunities for Japan Tobacco and COVIVIO HOTELS
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and COVIVIO is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH 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 are associated (or correlated) with COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and COVIVIO HOTELS go up and down completely randomly.
Pair Corralation between Japan Tobacco and COVIVIO HOTELS
Assuming the 90 days horizon Japan Tobacco is expected to under-perform the COVIVIO HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, Japan Tobacco is 1.11 times less risky than COVIVIO HOTELS. The stock trades about -0.02 of its potential returns per unit of risk. The COVIVIO HOTELS INH is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,840 in COVIVIO HOTELS INH on October 6, 2024 and sell it today you would earn a total of 180.00 from holding COVIVIO HOTELS INH or generate 9.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Japan Tobacco vs. COVIVIO HOTELS INH
Performance |
Timeline |
Japan Tobacco |
COVIVIO HOTELS INH |
Japan Tobacco and COVIVIO HOTELS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Japan Tobacco and COVIVIO HOTELS
The main advantage of trading using opposite Japan Tobacco and COVIVIO HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco position performs unexpectedly, COVIVIO HOTELS 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 COVIVIO HOTELS will offset losses from the drop in COVIVIO HOTELS's long position.Japan Tobacco vs. PACIFIC ONLINE | Japan Tobacco vs. FAIR ISAAC | Japan Tobacco vs. CHINA SOUTHN AIR H | Japan Tobacco vs. Delta Air Lines |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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