Correlation Between JB Hi and Silex Systems
Can any of the company-specific risk be diversified away by investing in both JB Hi and Silex Systems 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 JB Hi and Silex Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JB Hi Fi and Silex Systems, you can compare the effects of market volatilities on JB Hi and Silex Systems 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 JB Hi with a short position of Silex Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hi and Silex Systems.
Diversification Opportunities for JB Hi and Silex Systems
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JBH and Silex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JB Hi Fi and Silex Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silex Systems and JB Hi 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 JB Hi Fi are associated (or correlated) with Silex Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silex Systems has no effect on the direction of JB Hi i.e., JB Hi and Silex Systems go up and down completely randomly.
Pair Corralation between JB Hi and Silex Systems
Assuming the 90 days trading horizon JB Hi is expected to generate 1.17 times less return on investment than Silex Systems. But when comparing it to its historical volatility, JB Hi Fi is 3.1 times less risky than Silex Systems. It trades about 0.4 of its potential returns per unit of risk. Silex Systems is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 527.00 in Silex Systems on September 4, 2024 and sell it today you would earn a total of 64.00 from holding Silex Systems or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JB Hi Fi vs. Silex Systems
Performance |
| Timeline |
| JB Hi Fi |
| Silex Systems |
JB Hi and Silex Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JB Hi and Silex Systems
The main advantage of trading using opposite JB Hi and Silex Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hi position performs unexpectedly, Silex Systems 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 Silex Systems will offset losses from the drop in Silex Systems' long position.| JB Hi vs. Inventis | JB Hi vs. Pengana Private Equity | JB Hi vs. PM Capital Global | JB Hi vs. Macquarie Group Ltd |
| Silex Systems vs. TPG Telecom | Silex Systems vs. Insignia Financial | Silex Systems vs. Queste Communications | Silex Systems vs. Perpetual Credit Income |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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