Correlation Between Jacquet Metal and Kingfisher PLC

Can any of the company-specific risk be diversified away by investing in both Jacquet Metal and Kingfisher PLC 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 Jacquet Metal and Kingfisher PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jacquet Metal Service and Kingfisher PLC, you can compare the effects of market volatilities on Jacquet Metal and Kingfisher PLC 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 Jacquet Metal with a short position of Kingfisher PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and Kingfisher PLC.

Diversification Opportunities for Jacquet Metal and Kingfisher PLC

0.71

Correlation Coefficient

Jacquet Metal  Kingfisher PLC

Poor diversification

The 3 months correlation between Jacquet and Kingfisher is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and Kingfisher PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher PLC and Jacquet Metal 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 Jacquet Metal Service are associated (or correlated) with Kingfisher PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher PLC has no effect on the direction of Jacquet Metal i.e., Jacquet Metal and Kingfisher PLC go up and down completely randomly.

Pair Corralation between Jacquet Metal and Kingfisher PLC

Assuming the 90 days trading horizon Jacquet Metal Service is expected to generate 1.41 times more return on investment than Kingfisher PLC. However, Jacquet Metal is 1.41 times more volatile than Kingfisher PLC. It trades about 0.14 of its potential returns per unit of risk. Kingfisher PLC is currently generating about 0.13 per unit of risk. If you would invest  1,734  in Jacquet Metal Service on December 25, 2024 and sell it today you would earn a total of  344.00  from holding Jacquet Metal Service or generate 19.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Jacquet Metal Service  vs.  Kingfisher PLC

Jacquet Metal Service

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Jacquet Metal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kingfisher PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfisher PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kingfisher PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacquet Metal and Kingfisher PLC

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

The idea behind Jacquet Metal Service and Kingfisher PLC 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.