Correlation Between General Shopping and JHSF Participaes
Can any of the company-specific risk be diversified away by investing in both General Shopping and JHSF Participaes 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 General Shopping and JHSF Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Shopping e and JHSF Participaes SA, you can compare the effects of market volatilities on General Shopping and JHSF Participaes 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 General Shopping with a short position of JHSF Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Shopping and JHSF Participaes.
Diversification Opportunities for General Shopping and JHSF Participaes
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and JHSF is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Shopping e and JHSF Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JHSF Participaes and General Shopping 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 General Shopping e are associated (or correlated) with JHSF Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JHSF Participaes has no effect on the direction of General Shopping i.e., General Shopping and JHSF Participaes go up and down completely randomly.
Pair Corralation between General Shopping and JHSF Participaes
Assuming the 90 days trading horizon General Shopping e is expected to under-perform the JHSF Participaes. In addition to that, General Shopping is 1.5 times more volatile than JHSF Participaes SA. It trades about -0.38 of its total potential returns per unit of risk. JHSF Participaes SA is currently generating about 0.15 per unit of volatility. If you would invest 429.00 in JHSF Participaes SA on August 30, 2024 and sell it today you would earn a total of 27.00 from holding JHSF Participaes SA or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Shopping e vs. JHSF Participaes SA
Performance |
| Timeline |
| General Shopping e |
| JHSF Participaes |
General Shopping and JHSF Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Shopping and JHSF Participaes
The main advantage of trading using opposite General Shopping and JHSF Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Shopping position performs unexpectedly, JHSF Participaes 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 JHSF Participaes will offset losses from the drop in JHSF Participaes' long position.The idea behind General Shopping e and JHSF Participaes SA 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.| JHSF Participaes vs. Cogna Educao SA | JHSF Participaes vs. Cyrela Brazil Realty | JHSF Participaes vs. EZTEC Empreendimentos e |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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