Correlation Between Green Globe and Japan Tobacco

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

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

Diversification Opportunities for Green Globe and Japan Tobacco

-0.15

Correlation Coefficient

Green Globe  Japan Tobacco

Good diversification

The 3 months correlation between Green and Japan is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Green Globe International and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco and Green Globe 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 Green Globe International 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 Green Globe i.e., Green Globe and Japan Tobacco go up and down completely randomly.

Pair Corralation between Green Globe and Japan Tobacco

Given the investment horizon of 90 days Green Globe International is expected to generate 73.99 times more return on investment than Japan Tobacco. However, Green Globe is 73.99 times more volatile than Japan Tobacco. It trades about 0.25 of its potential returns per unit of risk. Japan Tobacco is currently generating about 0.07 per unit of risk. If you would invest  0.01  in Green Globe International on July 3, 2025 and sell it today you would earn a total of  0.00  from holding Green Globe International or generate 0.0% return on investment over 90 days.

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

Green Globe International  vs.  Japan Tobacco

Green Globe International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Green Globe International are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal forward indicators, Green Globe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Japan Tobacco

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Tobacco are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Japan Tobacco reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Globe and Japan Tobacco

The main advantage of trading using opposite Green Globe and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Globe 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 Green Globe International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.