Correlation Between JAPAN TOBACCO and GRIFFIN MINING

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

Diversification Opportunities for JAPAN TOBACCO and GRIFFIN MINING

0.29

Correlation Coefficient

JAPAN TOBACCO  GRIFFIN MINING

Modest diversification

The 3 months correlation between JAPAN and GRIFFIN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 and GRIFFIN MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIFFIN MINING LTD 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 GRIFFIN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIFFIN MINING LTD has no effect on the direction of JAPAN TOBACCO i.e., JAPAN TOBACCO and GRIFFIN MINING go up and down completely randomly.

Pair Corralation between JAPAN TOBACCO and GRIFFIN MINING

Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.75 times more return on investment than GRIFFIN MINING. However, JAPAN TOBACCO UNSPADR12 is 1.34 times less risky than GRIFFIN MINING. It trades about 0.04 of its potential returns per unit of risk. GRIFFIN MINING LTD is currently generating about 0.03 per unit of risk. If you would invest  1,240  in JAPAN TOBACCO UNSPADR12 on September 3, 2024 and sell it today you would earn a total of  40.00  from holding JAPAN TOBACCO UNSPADR12 or generate 3.23% 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.  GRIFFIN MINING LTD

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN TOBACCO UNSPADR12 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.

GRIFFIN MINING LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRIFFIN MINING LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GRIFFIN MINING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JAPAN TOBACCO and GRIFFIN MINING

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

The idea behind JAPAN TOBACCO UNSPADR12 and GRIFFIN MINING LTD 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..