Correlation Between Vicinity Centres and JAPAN TOBACCO

Can any of the company-specific risk be diversified away by investing in both Vicinity Centres 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 Vicinity Centres and JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vicinity Centres and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Vicinity Centres 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 Vicinity Centres with a short position of JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity Centres and JAPAN TOBACCO.

Diversification Opportunities for Vicinity Centres and JAPAN TOBACCO

-0.32

Correlation Coefficient

Vicinity Centres  JAPAN TOBACCO

Very good diversification

The 3 months correlation between Vicinity and JAPAN is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 and Vicinity Centres 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 Vicinity Centres 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 UNSPADR12 has no effect on the direction of Vicinity Centres i.e., Vicinity Centres and JAPAN TOBACCO go up and down completely randomly.

Pair Corralation between Vicinity Centres and JAPAN TOBACCO

Assuming the 90 days horizon Vicinity Centres is expected to generate 0.87 times more return on investment than JAPAN TOBACCO. However, Vicinity Centres is 1.14 times less risky than JAPAN TOBACCO. It trades about 0.13 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about -0.05 per unit of risk. If you would invest  120.00  in Vicinity Centres on April 22, 2025 and sell it today you would earn a total of  14.00  from holding Vicinity Centres or generate 11.67% return on investment over 90 days.

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

Vicinity Centres  vs.  JAPAN TOBACCO UNSPADR12

Vicinity Centres

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vicinity Centres are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vicinity Centres may actually be approaching a critical reversion point that can send shares even higher in August 2025.

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

Very Weak

Over the last 90 days JAPAN TOBACCO UNSPADR12 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 Vicinity Centres and JAPAN TOBACCO

The main advantage of trading using opposite Vicinity Centres and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity Centres 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 Vicinity Centres and JAPAN TOBACCO UNSPADR12 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.