Correlation Between Australian Strategic and JB Hi

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Can any of the company-specific risk be diversified away by investing in both Australian Strategic and JB Hi 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 Australian Strategic and JB Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Strategic Materials and JB Hi Fi, you can compare the effects of market volatilities on Australian Strategic and JB Hi 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 Australian Strategic with a short position of JB Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and JB Hi.

Diversification Opportunities for Australian Strategic and JB Hi

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Australian and JBH is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials 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 Australian Strategic 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 Australian Strategic Materials are associated (or correlated) with JB Hi. 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 Australian Strategic i.e., Australian Strategic and JB Hi go up and down completely randomly.

Pair Corralation between Australian Strategic and JB Hi

Assuming the 90 days trading horizon Australian Strategic Materials is expected to under-perform the JB Hi. In addition to that, Australian Strategic is 2.18 times more volatile than JB Hi Fi. It trades about -0.03 of its total potential returns per unit of risk. JB Hi Fi is currently generating about 0.18 per unit of volatility. If you would invest  7,922  in JB Hi Fi on October 4, 2024 and sell it today you would earn a total of  1,537  from holding JB Hi Fi or generate 19.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Australian Strategic Materials  vs.  JB Hi Fi

 Performance 
       Timeline  
Australian Strategic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Australian Strategic Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JB Hi Fi 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in JB Hi Fi are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, JB Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Australian Strategic and JB Hi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Australian Strategic and JB Hi

The main advantage of trading using opposite Australian Strategic and JB Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic position performs unexpectedly, JB Hi 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 will offset losses from the drop in JB Hi's long position.
The idea behind Australian Strategic Materials 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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