Correlation Between Jean and Shuttle

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

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

Diversification Opportunities for Jean and Shuttle

0.16

Correlation Coefficient

Jean  Shuttle

Average diversification

The 3 months correlation between Jean and Shuttle is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Jean Co and Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuttle and Jean 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 Jean Co are associated (or correlated) with Shuttle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuttle has no effect on the direction of Jean i.e., Jean and Shuttle go up and down completely randomly.

Pair Corralation between Jean and Shuttle

Assuming the 90 days trading horizon Jean Co is expected to under-perform the Shuttle. But the stock apears to be less risky and, when comparing its historical volatility, Jean Co is 1.06 times less risky than Shuttle. The stock trades about -0.05 of its potential returns per unit of risk. The Shuttle is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,050  in Shuttle on September 29, 2024 and sell it today you would earn a total of  40.00  from holding Shuttle or generate 1.95% return on investment over 90 days.

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

Jean Co  vs.  Shuttle

Jean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jean Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Shuttle

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shuttle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shuttle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jean and Shuttle

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

The idea behind Jean Co and Shuttle 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.