Correlation Between JS Investments and Hi Tech
Can any of the company-specific risk be diversified away by investing in both JS Investments and Hi Tech 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 JS Investments and Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Hi Tech Lubricants, you can compare the effects of market volatilities on JS Investments and Hi Tech 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 JS Investments with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Hi Tech.
Diversification Opportunities for JS Investments and Hi Tech
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between JSIL and HTL is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants and JS Investments 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 JS Investments are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of JS Investments i.e., JS Investments and Hi Tech go up and down completely randomly.
Pair Corralation between JS Investments and Hi Tech
Assuming the 90 days trading horizon JS Investments is expected to generate 5.02 times less return on investment than Hi Tech. But when comparing it to its historical volatility, JS Investments is 1.05 times less risky than Hi Tech. It trades about 0.02 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,910 in Hi Tech Lubricants on August 29, 2024 and sell it today you would earn a total of 206.00 from holding Hi Tech Lubricants or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JS Investments vs. Hi Tech Lubricants
Performance |
| Timeline |
| JS Investments |
| Hi Tech Lubricants |
JS Investments and Hi Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Hi Tech
The main advantage of trading using opposite JS Investments and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.| JS Investments vs. Askari Bank | JS Investments vs. Orient Rental Modaraba | JS Investments vs. Shaheen Insurance | JS Investments vs. United Insurance |
| Hi Tech vs. Al Ghazi Tractors | Hi Tech vs. Nestle Pakistan | Hi Tech vs. Hinopak Motors | Hi Tech vs. Abbott Laboratories Pakistan |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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