Correlation Between Seven West and Jade Gas
Can any of the company-specific risk be diversified away by investing in both Seven West and Jade Gas 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 Seven West and Jade Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Jade Gas Holdings, you can compare the effects of market volatilities on Seven West and Jade Gas 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 Seven West with a short position of Jade Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Jade Gas.
Diversification Opportunities for Seven West and Jade Gas
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seven and Jade is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Jade Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Gas Holdings and Seven West 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 Seven West Media are associated (or correlated) with Jade Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Gas Holdings has no effect on the direction of Seven West i.e., Seven West and Jade Gas go up and down completely randomly.
Pair Corralation between Seven West and Jade Gas
Assuming the 90 days trading horizon Seven West Media is expected to under-perform the Jade Gas. But the stock apears to be less risky and, when comparing its historical volatility, Seven West Media is 1.61 times less risky than Jade Gas. The stock trades about -0.04 of its potential returns per unit of risk. The Jade Gas Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.30 in Jade Gas Holdings on September 3, 2024 and sell it today you would earn a total of 0.60 from holding Jade Gas Holdings or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. Jade Gas Holdings
Performance |
| Timeline |
| Seven West Media |
| Jade Gas Holdings |
Seven West and Jade Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and Jade Gas
The main advantage of trading using opposite Seven West and Jade Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, Jade Gas 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 Jade Gas will offset losses from the drop in Jade Gas' long position.| Seven West vs. ABACUS STORAGE KING | Seven West vs. Queste Communications | Seven West vs. Collins Foods | Seven West vs. Richmond Vanadium Technology |
| Jade Gas vs. Regis Healthcare | Jade Gas vs. Health and Plant | Jade Gas vs. Ramsay Health Care | Jade Gas vs. COAST ENTERTAINMENT HOLDINGS |
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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