Correlation Between Jumbo SA and Motor Oil

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

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

Diversification Opportunities for Jumbo SA and Motor Oil

0.52

Correlation Coefficient

Jumbo SA  Motor Oil

Very weak diversification

The 3 months correlation between Jumbo and Motor is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Jumbo SA and Motor Oil Corinth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motor Oil Corinth and Jumbo SA 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 Jumbo SA are associated (or correlated) with Motor Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motor Oil Corinth has no effect on the direction of Jumbo SA i.e., Jumbo SA and Motor Oil go up and down completely randomly.

Pair Corralation between Jumbo SA and Motor Oil

Assuming the 90 days trading horizon Jumbo SA is expected to generate 1.14 times more return on investment than Motor Oil. However, Jumbo SA is 1.14 times more volatile than Motor Oil Corinth. It trades about 0.08 of its potential returns per unit of risk. Motor Oil Corinth is currently generating about -0.06 per unit of risk. If you would invest  2,438  in Jumbo SA on September 13, 2024 and sell it today you would earn a total of  172.00  from holding Jumbo SA or generate 7.05% return on investment over 90 days.

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

Jumbo SA  vs.  Motor Oil Corinth

Jumbo SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jumbo SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Jumbo SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Motor Oil Corinth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Motor Oil Corinth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Motor Oil 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 Jumbo SA and Motor Oil

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

The idea behind Jumbo SA and Motor Oil Corinth 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.