Correlation Between Autosports Group and JB Hi-Fi

Can any of the company-specific risk be diversified away by investing in both Autosports Group and JB Hi-Fi 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 Autosports Group and JB Hi-Fi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Autosports Group and JB Hi Fi, you can compare the effects of market volatilities on Autosports Group and JB Hi-Fi 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 Autosports Group with a short position of JB Hi-Fi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports Group and JB Hi-Fi.

Diversification Opportunities for Autosports Group and JB Hi-Fi

-0.31

Correlation Coefficient

Autosports Group  JB Hi-Fi

Very good diversification

The 3 months correlation between Autosports and JBH is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and JB Hi Fi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hi Fi and Autosports Group 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 Autosports Group are associated (or correlated) with JB Hi-Fi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hi Fi has no effect on the direction of Autosports Group i.e., Autosports Group and JB Hi-Fi go up and down completely randomly.

Pair Corralation between Autosports Group and JB Hi-Fi

Assuming the 90 days trading horizon Autosports Group is expected to generate 1.12 times more return on investment than JB Hi-Fi. However, Autosports Group is 1.12 times more volatile than JB Hi Fi. It trades about 0.04 of its potential returns per unit of risk. JB Hi Fi is currently generating about 0.01 per unit of risk. If you would invest  172.00  in Autosports Group on December 30, 2024 and sell it today you would earn a total of  6.00  from holding Autosports Group or generate 3.49% return on investment over 90 days.

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

Autosports Group  vs.  JB Hi Fi

Autosports Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autosports Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Autosports Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JB Hi Fi

Risk-Adjusted Performance

Very Weak

Over the last 90 days JB Hi Fi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, JB Hi-Fi is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Autosports Group and JB Hi-Fi

The main advantage of trading using opposite Autosports Group and JB Hi-Fi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports Group position performs unexpectedly, JB Hi-Fi 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 JB Hi-Fi will offset losses from the drop in JB Hi-Fi's long position.

The idea behind Autosports Group and JB Hi Fi 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.