Correlation Between J+J SNACK and MEDICAL FACILITIES
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and MEDICAL FACILITIES 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 J+J SNACK and MEDICAL FACILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJ SNACK FOODS and MEDICAL FACILITIES NEW, you can compare the effects of market volatilities on J+J SNACK and MEDICAL FACILITIES 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 J+J SNACK with a short position of MEDICAL FACILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and MEDICAL FACILITIES.
Diversification Opportunities for J+J SNACK and MEDICAL FACILITIES
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between J+J and MEDICAL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and MEDICAL FACILITIES NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICAL FACILITIES NEW and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with MEDICAL FACILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICAL FACILITIES NEW has no effect on the direction of J+J SNACK i.e., J+J SNACK and MEDICAL FACILITIES go up and down completely randomly.
Pair Corralation between J+J SNACK and MEDICAL FACILITIES
Assuming the 90 days trading horizon J+J SNACK is expected to generate 7.21 times less return on investment than MEDICAL FACILITIES. But when comparing it to its historical volatility, JJ SNACK FOODS is 1.91 times less risky than MEDICAL FACILITIES. It trades about 0.02 of its potential returns per unit of risk. MEDICAL FACILITIES NEW is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 591.00 in MEDICAL FACILITIES NEW on September 24, 2024 and sell it today you would earn a total of 449.00 from holding MEDICAL FACILITIES NEW or generate 75.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJ SNACK FOODS vs. MEDICAL FACILITIES NEW
Performance |
| Timeline |
| JJ SNACK FOODS |
| MEDICAL FACILITIES NEW |
J+J SNACK and MEDICAL FACILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and MEDICAL FACILITIES
The main advantage of trading using opposite J+J SNACK and MEDICAL FACILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, MEDICAL FACILITIES 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 MEDICAL FACILITIES will offset losses from the drop in MEDICAL FACILITIES's long position.| J+J SNACK vs. Mowi ASA | J+J SNACK vs. LEROY SEAFOOD GRUNSPADR | J+J SNACK vs. Lery Seafood Group | J+J SNACK vs. Nisshin Seifun Group |
| MEDICAL FACILITIES vs. Ramsay Health Care | MEDICAL FACILITIES vs. Medicover AB | MEDICAL FACILITIES vs. Charoen Pokphand Foods |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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