Correlation Between American Homes and Jardine Matheson

Can any of the company-specific risk be diversified away by investing in both American Homes and Jardine Matheson 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 American Homes and Jardine Matheson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Homes 4 and Jardine Matheson Holdings, you can compare the effects of market volatilities on American Homes and Jardine Matheson 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 American Homes with a short position of Jardine Matheson. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Jardine Matheson.

Diversification Opportunities for American Homes and Jardine Matheson

0.0

Correlation Coefficient

American Homes  Jardine Matheson

Pay attention - limited upside

The 3 months correlation between American and Jardine is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings and American Homes 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 American Homes 4 are associated (or correlated) with Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of American Homes i.e., American Homes and Jardine Matheson go up and down completely randomly.

Pair Corralation between American Homes and Jardine Matheson

If you would invest  3,664  in American Homes 4 on December 25, 2024 and sell it today you would lose (1.00) from holding American Homes 4 or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

American Homes 4  vs.  Jardine Matheson Holdings

American Homes 4

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Homes is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Jardine Matheson Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jardine Matheson Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Jardine Matheson is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Homes and Jardine Matheson

The main advantage of trading using opposite American Homes and Jardine Matheson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Jardine Matheson 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 Jardine Matheson will offset losses from the drop in Jardine Matheson's long position.

The idea behind American Homes 4 and Jardine Matheson Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.