Correlation Between JS Investments and Soneri Bank

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Can any of the company-specific risk be diversified away by investing in both JS Investments and Soneri Bank 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 Soneri Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Soneri Bank, you can compare the effects of market volatilities on JS Investments and Soneri Bank 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 Soneri Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Soneri Bank.

Diversification Opportunities for JS Investments and Soneri Bank

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between JSIL and Soneri is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Soneri Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soneri Bank 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 Soneri Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soneri Bank has no effect on the direction of JS Investments i.e., JS Investments and Soneri Bank go up and down completely randomly.

Pair Corralation between JS Investments and Soneri Bank

Assuming the 90 days trading horizon JS Investments is expected to generate 2.1 times less return on investment than Soneri Bank. In addition to that, JS Investments is 1.84 times more volatile than Soneri Bank. It trades about 0.03 of its total potential returns per unit of risk. Soneri Bank is currently generating about 0.11 per unit of volatility. If you would invest  639.00  in Soneri Bank on November 2, 2024 and sell it today you would earn a total of  1,191  from holding Soneri Bank or generate 186.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy68.06%
ValuesDaily Returns

JS Investments  vs.  Soneri Bank

 Performance 
       Timeline  
JS Investments 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JS Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JS Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Soneri Bank 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Soneri Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soneri Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

JS Investments and Soneri Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JS Investments and Soneri Bank

The main advantage of trading using opposite JS Investments and Soneri Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, Soneri Bank 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 Soneri Bank will offset losses from the drop in Soneri Bank's long position.
The idea behind JS Investments and Soneri Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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