Correlation Between Toma As and Philip Morris

Can any of the company-specific risk be diversified away by investing in both Toma As and Philip Morris 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 Toma As and Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Toma as and Philip Morris CR, you can compare the effects of market volatilities on Toma As and Philip Morris 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 Toma As with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toma As and Philip Morris.

Diversification Opportunities for Toma As and Philip Morris

-0.13

Correlation Coefficient

Toma As  Philip Morris

Good diversification

The 3 months correlation between Toma and Philip is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Toma as and Philip Morris CR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris CR and Toma As 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 Toma as are associated (or correlated) with Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris CR has no effect on the direction of Toma As i.e., Toma As and Philip Morris go up and down completely randomly.

Pair Corralation between Toma As and Philip Morris

Assuming the 90 days trading horizon Toma as is expected to under-perform the Philip Morris. In addition to that, Toma As is 4.59 times more volatile than Philip Morris CR. It trades about -0.01 of its total potential returns per unit of risk. Philip Morris CR is currently generating about 0.16 per unit of volatility. If you would invest  1,678,000  in Philip Morris CR on December 30, 2024 and sell it today you would earn a total of  122,000  from holding Philip Morris CR or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Toma as  vs.  Philip Morris CR

Toma as

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toma as has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Toma As is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Philip Morris CR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris CR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Philip Morris may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Toma As and Philip Morris

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

The idea behind Toma as and Philip Morris CR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.