Correlation Between Aryzta AG and JBS SA

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

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

Diversification Opportunities for Aryzta AG and JBS SA

-0.38

Correlation Coefficient

Aryzta AG  JBS SA

Very good diversification

The 3 months correlation between Aryzta and JBS is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and Aryzta AG 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 Aryzta AG PK are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Aryzta AG i.e., Aryzta AG and JBS SA go up and down completely randomly.

Pair Corralation between Aryzta AG and JBS SA

Assuming the 90 days horizon Aryzta AG is expected to generate 1.25 times less return on investment than JBS SA. But when comparing it to its historical volatility, Aryzta AG PK is 1.01 times less risky than JBS SA. It trades about 0.04 of its potential returns per unit of risk. JBS SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  846.00  in JBS SA on December 4, 2024 and sell it today you would earn a total of  230.00  from holding JBS SA or generate 27.19% return on investment over 90 days.

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

Aryzta AG PK  vs.  JBS SA

Aryzta AG PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

JBS SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days JBS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aryzta AG and JBS SA

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

The idea behind Aryzta AG PK and JBS SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..