Correlation Between JAPAN TOBACCO and QUEEN S

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

By analyzing existing cross correlation between JAPAN TOBACCO UNSPADR12 and QUEEN S ROAD, you can compare the effects of market volatilities on JAPAN TOBACCO and QUEEN S 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 QUEEN S. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and QUEEN S.

Diversification Opportunities for JAPAN TOBACCO and QUEEN S

-0.32

Correlation Coefficient

JAPAN TOBACCO  QUEEN S

Very good diversification

The 3 months correlation between JAPAN and QUEEN is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and QUEEN S ROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUEEN S ROAD 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 UNSPADR12 are associated (or correlated) with QUEEN S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUEEN S ROAD has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and QUEEN S go up and down completely randomly.

Pair Corralation between JAPAN TOBACCO and QUEEN S

Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.53 times more return on investment than QUEEN S. However, JAPAN TOBACCO UNSPADR12 is 1.9 times less risky than QUEEN S. It trades about 0.07 of its potential returns per unit of risk. QUEEN S ROAD is currently generating about -0.15 per unit of risk. If you would invest  1,180  in JAPAN TOBACCO UNSPADR12 on December 29, 2024 and sell it today you would earn a total of  60.00  from holding JAPAN TOBACCO UNSPADR12 or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.3%
Values	Daily Returns

JAPAN TOBACCO UNSPADR12  vs.  QUEEN S ROAD

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN TOBACCO UNSPADR12 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JAPAN TOBACCO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

QUEEN S ROAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days QUEEN S ROAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with JAPAN TOBACCO and QUEEN S

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

The idea behind JAPAN TOBACCO UNSPADR12 and QUEEN S ROAD 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.