Correlation Between JBS ON and Oi SA
Can any of the company-specific risk be diversified away by investing in both JBS ON and Oi SA 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 JBS ON and Oi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JBS ON NM and Oi SA, you can compare the effects of market volatilities on JBS ON and Oi SA 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 JBS ON with a short position of Oi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBS ON and Oi SA.
Diversification Opportunities for JBS ON and Oi SA
Very good diversification
The 3 months correlation between JBS and OIBR3 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JBS ON NM and Oi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oi SA and JBS ON 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 JBS ON NM are associated (or correlated) with Oi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oi SA has no effect on the direction of JBS ON i.e., JBS ON and Oi SA go up and down completely randomly.
Pair Corralation between JBS ON and Oi SA
Assuming the 90 days trading horizon JBS ON NM is expected to generate 0.07 times more return on investment than Oi SA. However, JBS ON NM is 14.66 times less risky than Oi SA. It trades about -0.03 of its potential returns per unit of risk. Oi SA is currently generating about -0.13 per unit of risk. If you would invest 3,594 in JBS ON NM on August 27, 2024 and sell it today you would lose (42.00) from holding JBS ON NM or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JBS ON NM vs. Oi SA
Performance |
| Timeline |
| JBS ON NM |
| Oi SA |
JBS ON and Oi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JBS ON and Oi SA
The main advantage of trading using opposite JBS ON and Oi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBS ON position performs unexpectedly, Oi SA 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 Oi SA will offset losses from the drop in Oi SA's long position.| JBS ON vs. Verizon Communications | JBS ON vs. Telecomunicaes Brasileiras SA | JBS ON vs. Taiwan Semiconductor Manufacturing | JBS ON vs. Unity Software |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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