Correlation Between SIEM OFFSHORE and Japan Tobacco

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

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

Diversification Opportunities for SIEM OFFSHORE and Japan Tobacco

0.39

Correlation Coefficient

SIEM OFFSHORE  Japan Tobacco

Weak diversification

The 3 months correlation between SIEM and Japan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SIEM OFFSHORE NEW and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and SIEM OFFSHORE 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 SIEM OFFSHORE NEW 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 SIEM OFFSHORE i.e., SIEM OFFSHORE and Japan Tobacco go up and down completely randomly.

Pair Corralation between SIEM OFFSHORE and Japan Tobacco

Assuming the 90 days trading horizon SIEM OFFSHORE NEW is expected to under-perform the Japan Tobacco. In addition to that, SIEM OFFSHORE is 1.97 times more volatile than Japan Tobacco. It trades about -0.02 of its total potential returns per unit of risk. Japan Tobacco is currently generating about 0.04 per unit of volatility. If you would invest  2,548  in Japan Tobacco on September 2, 2024 and sell it today you would earn a total of  88.00  from holding Japan Tobacco or generate 3.45% return on investment over 90 days.

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

SIEM OFFSHORE NEW  vs.  Japan Tobacco

SIEM OFFSHORE NEW

Risk-Adjusted Performance

0 of 100

Very Weak

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

Japan Tobacco

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Tobacco are ranked lower than 3 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SIEM OFFSHORE and Japan Tobacco

The main advantage of trading using opposite SIEM OFFSHORE and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEM OFFSHORE 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 SIEM OFFSHORE NEW 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.