Correlation Between JAPAN TOBACCO and Sixt Leasing

Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO and Sixt Leasing 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 Sixt Leasing 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 Sixt Leasing SE, you can compare the effects of market volatilities on JAPAN TOBACCO and Sixt Leasing 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 Sixt Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Sixt Leasing.

Diversification Opportunities for JAPAN TOBACCO and Sixt Leasing

0.37

Correlation Coefficient

JAPAN TOBACCO  Sixt Leasing

Weak diversification

The 3 months correlation between JAPAN and Sixt is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Sixt Leasing go up and down completely randomly.

Pair Corralation between JAPAN TOBACCO and Sixt Leasing

Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.4 times more return on investment than Sixt Leasing. However, JAPAN TOBACCO UNSPADR12 is 2.5 times less risky than Sixt Leasing. It trades about 0.11 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about 0.02 per unit of risk. If you would invest  1,150  in JAPAN TOBACCO UNSPADR12 on December 29, 2024 and sell it today you would earn a total of  90.00  from holding JAPAN TOBACCO UNSPADR12 or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JAPAN TOBACCO UNSPADR12  vs.  Sixt Leasing SE

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN TOBACCO UNSPADR12 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, JAPAN TOBACCO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sixt Leasing SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt Leasing SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sixt Leasing is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JAPAN TOBACCO and Sixt Leasing

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

The idea behind JAPAN TOBACCO UNSPADR12 and Sixt Leasing SE 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..