Correlation Between Better World and Jasmine International
Can any of the company-specific risk be diversified away by investing in both Better World and Jasmine 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 Better World and Jasmine International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Better World Green and Jasmine International Public, you can compare the effects of market volatilities on Better World and Jasmine 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 Better World with a short position of Jasmine International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better World and Jasmine International.
Diversification Opportunities for Better World and Jasmine International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Better and Jasmine is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Better World Green and Jasmine International Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasmine International and Better World 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 Better World Green are associated (or correlated) with Jasmine International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasmine International has no effect on the direction of Better World i.e., Better World and Jasmine International go up and down completely randomly.
Pair Corralation between Better World and Jasmine International
Assuming the 90 days trading horizon Better World Green is expected to generate 1.19 times more return on investment than Jasmine International. However, Better World is 1.19 times more volatile than Jasmine International Public. It trades about 0.02 of its potential returns per unit of risk. Jasmine International Public is currently generating about -0.09 per unit of risk. If you would invest 42.00 in Better World Green on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Better World Green or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Better World Green vs. Jasmine International Public
Performance |
| Timeline |
| Better World Green |
| Jasmine International |
Better World and Jasmine International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Better World and Jasmine International
The main advantage of trading using opposite Better World and Jasmine International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better World position performs unexpectedly, Jasmine 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 Jasmine International will offset losses from the drop in Jasmine International's long position.| Better World vs. Beauty Community Public | Better World vs. Demco Public | Better World vs. Asia Aviation Public | Better World vs. CK Power Public |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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