Correlation Between Australian Agricultural and J+J SNACK

Can any of the company-specific risk be diversified away by investing in both Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural and JJ SNACK FOODS, you can compare the effects of market volatilities on Australian Agricultural 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 Australian Agricultural with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and J+J SNACK.

Diversification Opportunities for Australian Agricultural and J+J SNACK

-0.54

Correlation Coefficient

Australian Agricultural  J+J SNACK

Excellent diversification

The 3 months correlation between Australian and J+J is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural 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 Australian Agricultural 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 Agricultural 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 Australian Agricultural i.e., Australian Agricultural and J+J SNACK go up and down completely randomly.

Pair Corralation between Australian Agricultural and J+J SNACK

Assuming the 90 days horizon Australian Agricultural is expected to under-perform the J+J SNACK. In addition to that, Australian Agricultural is 1.61 times more volatile than JJ SNACK FOODS. It trades about -0.02 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Australian Agricultural  vs.  JJ SNACK FOODS

Australian Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Australian Agricultural is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the 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 Australian Agricultural and J+J SNACK

The main advantage of trading using opposite Australian Agricultural and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural 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 Australian Agricultural 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.