Correlation Between Bright Kindle and Jollibee Foods

Can any of the company-specific risk be diversified away by investing in both Bright Kindle and Jollibee Foods 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 Bright Kindle and Jollibee Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bright Kindle Resources and Jollibee Foods Corp, you can compare the effects of market volatilities on Bright Kindle and Jollibee Foods 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 Bright Kindle with a short position of Jollibee Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Kindle and Jollibee Foods.

Diversification Opportunities for Bright Kindle and Jollibee Foods

-0.6

Correlation Coefficient

Bright Kindle  Jollibee Foods

Excellent diversification

The 3 months correlation between Bright and Jollibee is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bright Kindle Resources and Jollibee Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods Corp and Bright Kindle 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 Bright Kindle Resources are associated (or correlated) with Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods Corp has no effect on the direction of Bright Kindle i.e., Bright Kindle and Jollibee Foods go up and down completely randomly.

Pair Corralation between Bright Kindle and Jollibee Foods

Assuming the 90 days trading horizon Bright Kindle Resources is expected to generate 2.85 times more return on investment than Jollibee Foods. However, Bright Kindle is 2.85 times more volatile than Jollibee Foods Corp. It trades about 0.13 of its potential returns per unit of risk. Jollibee Foods Corp is currently generating about 0.03 per unit of risk. If you would invest  74.00  in Bright Kindle Resources on November 28, 2024 and sell it today you would earn a total of  35.00  from holding Bright Kindle Resources or generate 47.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.92%
Values	Daily Returns

Bright Kindle Resources  vs.  Jollibee Foods Corp

Bright Kindle Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Kindle Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bright Kindle exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jollibee Foods Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jollibee Foods Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Jollibee Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bright Kindle and Jollibee Foods

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

The idea behind Bright Kindle Resources and Jollibee Foods Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.