Correlation Between MAGNUM MINING and Japan Tobacco

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

By analyzing existing cross correlation between MAGNUM MINING EXP and Japan Tobacco, you can compare the effects of market volatilities on MAGNUM MINING and Japan Tobacco 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 MAGNUM MINING with a short position of Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNUM MINING and Japan Tobacco.

Diversification Opportunities for MAGNUM MINING and Japan Tobacco

0.0

Correlation Coefficient

MAGNUM MINING  Japan Tobacco

Pay attention - limited upside

The 3 months correlation between MAGNUM and Japan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MAGNUM MINING EXP and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and MAGNUM MINING 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 MAGNUM MINING EXP are associated (or correlated) with Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of MAGNUM MINING i.e., MAGNUM MINING and Japan Tobacco go up and down completely randomly.

Pair Corralation between MAGNUM MINING and Japan Tobacco

If you would invest  2,556  in Japan Tobacco on September 20, 2024 and sell it today you would lose (6.00) from holding Japan Tobacco or give up 0.23% of portfolio value over 90 days.

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

MAGNUM MINING EXP  vs.  Japan Tobacco

MAGNUM MINING EXP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MAGNUM MINING is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with MAGNUM MINING and Japan Tobacco

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

The idea behind MAGNUM MINING EXP and Japan Tobacco 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.