Correlation Between JS Investments and International Steels
Can any of the company-specific risk be diversified away by investing in both JS Investments and International Steels 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 International Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and International Steels, you can compare the effects of market volatilities on JS Investments and International Steels 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 International Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and International Steels.
Diversification Opportunities for JS Investments and International Steels
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JSIL and International is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels 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 International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of JS Investments i.e., JS Investments and International Steels go up and down completely randomly.
Pair Corralation between JS Investments and International Steels
Assuming the 90 days trading horizon JS Investments is expected to generate 1.46 times more return on investment than International Steels. However, JS Investments is 1.46 times more volatile than International Steels. It trades about 0.16 of its potential returns per unit of risk. International Steels is currently generating about 0.07 per unit of risk. If you would invest 1,901 in JS Investments on August 26, 2024 and sell it today you would earn a total of 449.00 from holding JS Investments or generate 23.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
JS Investments vs. International Steels
Performance |
| Timeline |
| JS Investments |
| International Steels |
JS Investments and International Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and International Steels
The main advantage of trading using opposite JS Investments and International Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, International Steels 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 International Steels will offset losses from the drop in International Steels' long position.| JS Investments vs. Atlas Insurance | JS Investments vs. East West Insurance | JS Investments vs. Askari General Insurance | JS Investments vs. Agha Steel Industries |
| International Steels vs. Jubilee Life Insurance | International Steels vs. TPL Insurance | International Steels vs. Wah Nobel Chemicals | International Steels vs. Atlas Insurance |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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