Correlation Between JAPAN TOBACCO and Calibre Mining

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

Diversification Opportunities for JAPAN TOBACCO and Calibre Mining

0.07

Correlation Coefficient

JAPAN TOBACCO  Calibre Mining

Significant diversification

The 3 months correlation between JAPAN and Calibre is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and Calibre Mining go up and down completely randomly.

Pair Corralation between JAPAN TOBACCO and Calibre Mining

Assuming the 90 days trading horizon JAPAN TOBACCO is expected to generate 5.14 times less return on investment than Calibre Mining. But when comparing it to its historical volatility, JAPAN TOBACCO UNSPADR12 is 2.39 times less risky than Calibre Mining. It trades about 0.1 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  141.00  in Calibre Mining Corp on December 30, 2024 and sell it today you would earn a total of  66.00  from holding Calibre Mining Corp or generate 46.81% return on investment over 90 days.

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

JAPAN TOBACCO UNSPADR12  vs.  Calibre Mining Corp

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 fragile basic indicators, JAPAN TOBACCO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Calibre Mining Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calibre Mining Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Calibre Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JAPAN TOBACCO and Calibre Mining

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

The idea behind JAPAN TOBACCO UNSPADR12 and Calibre Mining Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.