Correlation Between Packages and JS Investments
Can any of the company-specific risk be diversified away by investing in both Packages and JS Investments 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 Packages and JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packages and JS Investments, you can compare the effects of market volatilities on Packages and JS Investments 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 Packages with a short position of JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packages and JS Investments.
Diversification Opportunities for Packages and JS Investments
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Packages and JSIL is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Packages and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Packages 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 Packages are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Packages i.e., Packages and JS Investments go up and down completely randomly.
Pair Corralation between Packages and JS Investments
Assuming the 90 days trading horizon Packages is expected to generate 1.03 times more return on investment than JS Investments. However, Packages is 1.03 times more volatile than JS Investments. It trades about 0.32 of its potential returns per unit of risk. JS Investments is currently generating about 0.02 per unit of risk. If you would invest 44,435 in Packages on August 29, 2024 and sell it today you would earn a total of 10,447 from holding Packages or generate 23.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packages vs. JS Investments
Performance |
| Timeline |
| Packages |
| JS Investments |
Packages and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packages and JS Investments
The main advantage of trading using opposite Packages and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packages position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| Packages vs. Unilever Pakistan Foods | Packages vs. Pakistan Aluminium Beverage | Packages vs. National Foods | Packages vs. Big Bird Foods |
| JS Investments vs. Askari Bank | JS Investments vs. Orient Rental Modaraba | JS Investments vs. Shaheen Insurance | JS Investments vs. United 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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