Correlation Between Energy and Jardine Matheson
Can any of the company-specific risk be diversified away by investing in both Energy and Jardine Matheson 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 Energy and Jardine Matheson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy and Water and Jardine Matheson Holdings, you can compare the effects of market volatilities on Energy and Jardine Matheson 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 Energy with a short position of Jardine Matheson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy and Jardine Matheson.
Diversification Opportunities for Energy and Jardine Matheson
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Energy and Jardine is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Water and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings and Energy 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 Energy and Water are associated (or correlated) with Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of Energy i.e., Energy and Jardine Matheson go up and down completely randomly.
Pair Corralation between Energy and Jardine Matheson
Given the investment horizon of 90 days Energy and Water is expected to generate 4.45 times more return on investment than Jardine Matheson. However, Energy is 4.45 times more volatile than Jardine Matheson Holdings. It trades about 0.01 of its potential returns per unit of risk. Jardine Matheson Holdings is currently generating about -0.08 per unit of risk. If you would invest 0.24 in Energy and Water on January 12, 2025 and sell it today you would lose (0.02) from holding Energy and Water or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy and Water vs. Jardine Matheson Holdings
Performance |
| Timeline |
| Energy and Water |
| Jardine Matheson Holdings |
Energy and Jardine Matheson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy and Jardine Matheson
The main advantage of trading using opposite Energy and Jardine Matheson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy position performs unexpectedly, Jardine Matheson 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 Jardine Matheson will offset losses from the drop in Jardine Matheson's long position.| Energy vs. Vow ASA | Energy vs. Eestech | Energy vs. One World Universe | Energy vs. Bion Environmental Technologies |
| Jardine Matheson vs. Frontera Group | Jardine Matheson vs. International Consolidated Companies | Jardine Matheson vs. Global Payments | Jardine Matheson vs. Eco Innovation Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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