Correlation Between JSL Construction and GenMont Biotech

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

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

Diversification Opportunities for JSL Construction and GenMont Biotech

0.73

Correlation Coefficient

JSL Construction  GenMont Biotech

Poor diversification

The 3 months correlation between JSL and GenMont is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding JSL Construction Development and GenMont Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GenMont Biotech and JSL Construction 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 JSL Construction Development are associated (or correlated) with GenMont Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GenMont Biotech has no effect on the direction of JSL Construction i.e., JSL Construction and GenMont Biotech go up and down completely randomly.

Pair Corralation between JSL Construction and GenMont Biotech

Assuming the 90 days trading horizon JSL Construction Development is expected to generate 3.3 times more return on investment than GenMont Biotech. However, JSL Construction is 3.3 times more volatile than GenMont Biotech. It trades about 0.03 of its potential returns per unit of risk. GenMont Biotech is currently generating about -0.02 per unit of risk. If you would invest  7,330  in JSL Construction Development on October 4, 2024 and sell it today you would earn a total of  1,940  from holding JSL Construction Development or generate 26.47% return on investment over 90 days.

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

JSL Construction Development  vs.  GenMont Biotech

JSL Construction Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSL Construction Development 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.

GenMont Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GenMont Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with JSL Construction and GenMont Biotech

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

The idea behind JSL Construction Development and GenMont Biotech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.