Correlation Between JS Investments and Towellers
Can any of the company-specific risk be diversified away by investing in both JS Investments and Towellers 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 Towellers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Towellers, you can compare the effects of market volatilities on JS Investments and Towellers 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 Towellers. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Towellers.
Diversification Opportunities for JS Investments and Towellers
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JSIL and Towellers is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Towellers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towellers 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 Towellers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towellers has no effect on the direction of JS Investments i.e., JS Investments and Towellers go up and down completely randomly.
Pair Corralation between JS Investments and Towellers
Assuming the 90 days trading horizon JS Investments is expected to generate 1.19 times more return on investment than Towellers. However, JS Investments is 1.19 times more volatile than Towellers. It trades about 0.15 of its potential returns per unit of risk. Towellers is currently generating about 0.12 per unit of risk. If you would invest 2,135 in JS Investments on August 31, 2024 and sell it today you would earn a total of 220.00 from holding JS Investments or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
JS Investments vs. Towellers
Performance |
| Timeline |
| JS Investments |
| Towellers |
JS Investments and Towellers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Towellers
The main advantage of trading using opposite JS Investments and Towellers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, Towellers 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 Towellers will offset losses from the drop in Towellers' long position.| JS Investments vs. Masood Textile Mills | JS Investments vs. Fauji Foods | JS Investments vs. KSB Pumps | JS Investments vs. Mari Petroleum |
| Towellers vs. Sitara Chemical Industries | Towellers vs. Big Bird Foods | Towellers vs. Pakistan Synthetics | Towellers vs. Pakistan Aluminium Beverage |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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