Correlation Between Japan Tobacco and Fielmann Aktiengesellscha

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

By analyzing existing cross correlation between Japan Tobacco and Fielmann Aktiengesellschaft, you can compare the effects of market volatilities on Japan Tobacco and Fielmann Aktiengesellscha 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 Fielmann Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Fielmann Aktiengesellscha.

Diversification Opportunities for Japan Tobacco and Fielmann Aktiengesellscha

-0.12

Correlation Coefficient

Japan Tobacco  Fielmann Aktiengesellscha

Good diversification

The 3 months correlation between Japan and Fielmann is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and Fielmann Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fielmann Aktiengesellscha 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 Fielmann Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fielmann Aktiengesellscha has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Fielmann Aktiengesellscha go up and down completely randomly.

Pair Corralation between Japan Tobacco and Fielmann Aktiengesellscha

Assuming the 90 days horizon Japan Tobacco is expected to generate 1.23 times more return on investment than Fielmann Aktiengesellscha. However, Japan Tobacco is 1.23 times more volatile than Fielmann Aktiengesellschaft. It trades about 0.05 of its potential returns per unit of risk. Fielmann Aktiengesellschaft is currently generating about -0.02 per unit of risk. If you would invest  1,998  in Japan Tobacco on September 25, 2024 and sell it today you would earn a total of  525.00  from holding Japan Tobacco or generate 26.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.76%
Values	Daily Returns

Japan Tobacco  vs.  Fielmann Aktiengesellschaft

Japan Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Tobacco is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fielmann Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fielmann Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Japan Tobacco and Fielmann Aktiengesellscha

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

The idea behind Japan Tobacco and Fielmann Aktiengesellschaft 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.