Correlation Between JS Investments and National Foods
Can any of the company-specific risk be diversified away by investing in both JS Investments and National Foods 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 National Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and National Foods, you can compare the effects of market volatilities on JS Investments and National Foods 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 National Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and National Foods.
Diversification Opportunities for JS Investments and National Foods
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JSIL and National is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and National Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Foods 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 National Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Foods has no effect on the direction of JS Investments i.e., JS Investments and National Foods go up and down completely randomly.
Pair Corralation between JS Investments and National Foods
Assuming the 90 days trading horizon JS Investments is expected to generate 2.05 times more return on investment than National Foods. However, JS Investments is 2.05 times more volatile than National Foods. It trades about 0.02 of its potential returns per unit of risk. National Foods is currently generating about -0.02 per unit of risk. If you would invest 2,200 in JS Investments on August 28, 2024 and sell it today you would earn a total of 5.00 from holding JS Investments or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JS Investments vs. National Foods
Performance |
| Timeline |
| JS Investments |
| National Foods |
JS Investments and National Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and National Foods
The main advantage of trading using opposite JS Investments and National Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, National Foods 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 National Foods will offset losses from the drop in National Foods' long position.| JS Investments vs. Askari Bank | JS Investments vs. Orient Rental Modaraba | JS Investments vs. Shaheen Insurance | JS Investments vs. United Insurance |
| National Foods vs. Matco Foods | National Foods vs. Pakistan Aluminium Beverage | National Foods vs. Crescent Star Insurance | National Foods vs. Unity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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