Correlation Between Avrot Industries and Jacob Finance

Can any of the company-specific risk be diversified away by investing in both Avrot Industries and Jacob Finance 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 Avrot Industries and Jacob Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avrot Industries and Jacob Finance And, you can compare the effects of market volatilities on Avrot Industries and Jacob Finance 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 Avrot Industries with a short position of Jacob Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avrot Industries and Jacob Finance.

Diversification Opportunities for Avrot Industries and Jacob Finance

-0.9

Correlation Coefficient

Avrot Industries  Jacob Finance

Pay attention - limited upside

The 3 months correlation between Avrot and Jacob is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Avrot Industries and Jacob Finance And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Finance And and Avrot Industries 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 Avrot Industries are associated (or correlated) with Jacob Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Finance And has no effect on the direction of Avrot Industries i.e., Avrot Industries and Jacob Finance go up and down completely randomly.

Pair Corralation between Avrot Industries and Jacob Finance

Assuming the 90 days trading horizon Avrot Industries is expected to under-perform the Jacob Finance. But the stock apears to be less risky and, when comparing its historical volatility, Avrot Industries is 2.51 times less risky than Jacob Finance. The stock trades about -0.25 of its potential returns per unit of risk. The Jacob Finance And is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  180,700  in Jacob Finance And on August 31, 2024 and sell it today you would earn a total of  24,300  from holding Jacob Finance And or generate 13.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.87%
Values	Daily Returns

Avrot Industries  vs.  Jacob Finance And

Avrot Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avrot Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Jacob Finance And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Finance And are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jacob Finance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avrot Industries and Jacob Finance

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

The idea behind Avrot Industries and Jacob Finance And 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.