Correlation Between Jumbo SA and Public Power

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

By analyzing existing cross correlation between Jumbo SA and Public Power, you can compare the effects of market volatilities on Jumbo SA and Public Power 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 Public Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jumbo SA and Public Power.

Diversification Opportunities for Jumbo SA and Public Power

0.32

Correlation Coefficient

Jumbo SA  Public Power

Weak diversification

The 3 months correlation between Jumbo and Public is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Jumbo SA and Public Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Power 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 Public Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Power has no effect on the direction of Jumbo SA i.e., Jumbo SA and Public Power go up and down completely randomly.

Pair Corralation between Jumbo SA and Public Power

Assuming the 90 days trading horizon Jumbo SA is expected to generate 1.18 times less return on investment than Public Power. But when comparing it to its historical volatility, Jumbo SA is 1.02 times less risky than Public Power. It trades about 0.06 of its potential returns per unit of risk. Public Power is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  730.00  in Public Power on October 26, 2024 and sell it today you would earn a total of  565.00  from holding Public Power or generate 77.4% return on investment over 90 days.

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

Jumbo SA  vs.  Public Power

Jumbo SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jumbo SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Jumbo SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Public Power

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Public Power are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Public Power may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jumbo SA and Public Power

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

The idea behind Jumbo SA and Public Power 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.