Correlation Between Jahen Household and Jason Furniture

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

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

Diversification Opportunities for Jahen Household and Jason Furniture

0.53

Correlation Coefficient

Jahen Household  Jason Furniture

Very weak diversification

The 3 months correlation between Jahen and Jason is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Jahen Household Products and Jason Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jason Furniture and Jahen Household 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 Jahen Household Products are associated (or correlated) with Jason Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jason Furniture has no effect on the direction of Jahen Household i.e., Jahen Household and Jason Furniture go up and down completely randomly.

Pair Corralation between Jahen Household and Jason Furniture

Assuming the 90 days trading horizon Jahen Household Products is expected to generate 2.04 times more return on investment than Jason Furniture. However, Jahen Household is 2.04 times more volatile than Jason Furniture. It trades about 0.07 of its potential returns per unit of risk. Jason Furniture is currently generating about 0.09 per unit of risk. If you would invest  1,556  in Jahen Household Products on September 26, 2024 and sell it today you would earn a total of  85.00  from holding Jahen Household Products or generate 5.46% return on investment over 90 days.

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

Jahen Household Products  vs.  Jason Furniture

Jahen Household Products

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jahen Household Products are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jahen Household sustained solid returns over the last few months and may actually be approaching a breakup point.

Jason Furniture

Risk-Adjusted Performance

3 of 100

OK

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

Pair Trading with Jahen Household and Jason Furniture

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

The idea behind Jahen Household Products and Jason Furniture 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.