Correlation Between H FARM and J+J SNACK

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

By analyzing existing cross correlation between H FARM SPA and JJ SNACK FOODS, you can compare the effects of market volatilities on H FARM and J+J SNACK 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 H FARM with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and J+J SNACK.

Diversification Opportunities for H FARM and J+J SNACK

-0.77

Correlation Coefficient

H FARM  J+J SNACK

Pay attention - limited upside

The 3 months correlation between 5JQ and J+J is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS and H FARM 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 H FARM SPA are associated (or correlated) with J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of H FARM i.e., H FARM and J+J SNACK go up and down completely randomly.

Pair Corralation between H FARM and J+J SNACK

Assuming the 90 days horizon H FARM is expected to generate 7.16 times less return on investment than J+J SNACK. In addition to that, H FARM is 3.91 times more volatile than JJ SNACK FOODS. It trades about 0.0 of its total potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.03 per unit of volatility. If you would invest  13,645  in JJ SNACK FOODS on September 26, 2024 and sell it today you would earn a total of  2,155  from holding JJ SNACK FOODS or generate 15.79% return on investment over 90 days.

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

H FARM SPA  vs.  JJ SNACK FOODS

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

JJ SNACK FOODS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, J+J SNACK is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with H FARM and J+J SNACK

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

The idea behind H FARM SPA and JJ SNACK FOODS 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.