Correlation Between Japan Tobacco and Pyxus International

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

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

Diversification Opportunities for Japan Tobacco and Pyxus International

-0.63

Correlation Coefficient

Japan Tobacco  Pyxus International

Excellent diversification

The 3 months correlation between Japan and Pyxus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and Pyxus International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxus International 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 are associated (or correlated) with Pyxus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxus International has no effect on the direction of Japan Tobacco i.e., Japan Tobacco and Pyxus International go up and down completely randomly.

Pair Corralation between Japan Tobacco and Pyxus International

Assuming the 90 days horizon Japan Tobacco is expected to generate 1.8 times less return on investment than Pyxus International. In addition to that, Japan Tobacco is 1.13 times more volatile than Pyxus International. It trades about 0.03 of its total potential returns per unit of risk. Pyxus International is currently generating about 0.05 per unit of volatility. If you would invest  400.00  in Pyxus International on May 15, 2025 and sell it today you would earn a total of  30.00  from holding Pyxus International or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Japan Tobacco  vs.  Pyxus International

Japan Tobacco

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Tobacco are ranked lower than 1 (%) 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.

Pyxus International

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Pyxus International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pyxus International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Japan Tobacco and Pyxus International

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

The idea behind Japan Tobacco and Pyxus International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.