Correlation Between Boom Logistics and Jupiter Energy

Can any of the company-specific risk be diversified away by investing in both Boom Logistics and Jupiter Energy 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 Boom Logistics and Jupiter Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boom Logistics and Jupiter Energy, you can compare the effects of market volatilities on Boom Logistics and Jupiter Energy 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 Boom Logistics with a short position of Jupiter Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boom Logistics and Jupiter Energy.

Diversification Opportunities for Boom Logistics and Jupiter Energy

-0.13

Correlation Coefficient

Boom Logistics  Jupiter Energy

Good diversification

The 3 months correlation between Boom and Jupiter is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Boom Logistics and Jupiter Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Energy and Boom Logistics 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 Boom Logistics are associated (or correlated) with Jupiter Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Energy has no effect on the direction of Boom Logistics i.e., Boom Logistics and Jupiter Energy go up and down completely randomly.

Pair Corralation between Boom Logistics and Jupiter Energy

Assuming the 90 days trading horizon Boom Logistics is expected to generate 0.3 times more return on investment than Jupiter Energy. However, Boom Logistics is 3.33 times less risky than Jupiter Energy. It trades about -0.02 of its potential returns per unit of risk. Jupiter Energy is currently generating about -0.11 per unit of risk. If you would invest  140.00  in Boom Logistics on September 24, 2024 and sell it today you would lose (1.00) from holding Boom Logistics or give up 0.71% of portfolio value over 90 days.

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

Boom Logistics  vs.  Jupiter Energy

Boom Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boom Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Boom Logistics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jupiter Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jupiter Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Jupiter Energy 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 Boom Logistics and Jupiter Energy

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

The idea behind Boom Logistics and Jupiter Energy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.