Correlation Between Jb Financial and Drb Industrial

Can any of the company-specific risk be diversified away by investing in both Jb Financial and Drb Industrial 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 Jb Financial and Drb Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jb Financial and Drb Industrial, you can compare the effects of market volatilities on Jb Financial and Drb Industrial 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 Jb Financial with a short position of Drb Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jb Financial and Drb Industrial.

Diversification Opportunities for Jb Financial and Drb Industrial

0.25

Correlation Coefficient

Jb Financial  Drb Industrial

Modest diversification

The 3 months correlation between 175330 and Drb is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jb Financial and Drb Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drb Industrial and Jb Financial 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 Jb Financial are associated (or correlated) with Drb Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drb Industrial has no effect on the direction of Jb Financial i.e., Jb Financial and Drb Industrial go up and down completely randomly.

Pair Corralation between Jb Financial and Drb Industrial

Assuming the 90 days trading horizon Jb Financial is expected to generate 0.8 times more return on investment than Drb Industrial. However, Jb Financial is 1.25 times less risky than Drb Industrial. It trades about 0.06 of its potential returns per unit of risk. Drb Industrial is currently generating about 0.02 per unit of risk. If you would invest  1,827,000  in Jb Financial on October 26, 2024 and sell it today you would earn a total of  114,000  from holding Jb Financial or generate 6.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Jb Financial  vs.  Drb Industrial

Jb Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jb Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jb Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Drb Industrial

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Drb Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Drb Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jb Financial and Drb Industrial

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

The idea behind Jb Financial and Drb Industrial 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.