Correlation Between Sakura Development and JSL Construction

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

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

Diversification Opportunities for Sakura Development and JSL Construction

0.5

Correlation Coefficient

Sakura Development  JSL Construction

Very weak diversification

The 3 months correlation between Sakura and JSL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sakura Development Co and JSL Construction Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL Construction Dev and Sakura Development 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 Sakura Development Co are associated (or correlated) with JSL Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL Construction Dev has no effect on the direction of Sakura Development i.e., Sakura Development and JSL Construction go up and down completely randomly.

Pair Corralation between Sakura Development and JSL Construction

Assuming the 90 days trading horizon Sakura Development Co is expected to generate 1.32 times more return on investment than JSL Construction. However, Sakura Development is 1.32 times more volatile than JSL Construction Development. It trades about 0.2 of its potential returns per unit of risk. JSL Construction Development is currently generating about -0.06 per unit of risk. If you would invest  5,300  in Sakura Development Co on December 10, 2024 and sell it today you would earn a total of  290.00  from holding Sakura Development Co or generate 5.47% return on investment over 90 days.

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

Sakura Development Co  vs.  JSL Construction Development

Sakura Development

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sakura Development Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sakura Development may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JSL Construction Dev

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JSL Construction Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, JSL Construction is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sakura Development and JSL Construction

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

The idea behind Sakura Development Co and JSL Construction Development 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.