Correlation Between Jb Financial and SP Systems

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

By analyzing existing cross correlation between Jb Financial and SP Systems CoLtd, you can compare the effects of market volatilities on Jb Financial and SP Systems 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 SP Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jb Financial and SP Systems.

Diversification Opportunities for Jb Financial and SP Systems

-0.72

Correlation Coefficient

Jb Financial  SP Systems

Pay attention - limited upside

The 3 months correlation between 175330 and 317830 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jb Financial and SP Systems CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Systems CoLtd 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 SP Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Systems CoLtd has no effect on the direction of Jb Financial i.e., Jb Financial and SP Systems go up and down completely randomly.

Pair Corralation between Jb Financial and SP Systems

Assuming the 90 days trading horizon Jb Financial is expected to generate 0.85 times more return on investment than SP Systems. However, Jb Financial is 1.18 times less risky than SP Systems. It trades about 0.24 of its potential returns per unit of risk. SP Systems CoLtd is currently generating about -0.12 per unit of risk. If you would invest  1,424,360  in Jb Financial on September 2, 2024 and sell it today you would earn a total of  543,640  from holding Jb Financial or generate 38.17% return on investment over 90 days.

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

Jb Financial  vs.  SP Systems CoLtd

Jb Financial

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jb Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jb Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

SP Systems CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP Systems CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jb Financial and SP Systems

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

The idea behind Jb Financial and SP Systems CoLtd 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.