Correlation Between DAIRY FARM and JABIL CIRCUIT

Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and JABIL CIRCUIT 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 DAIRY FARM and JABIL CIRCUIT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAIRY FARM INTL and JABIL CIRCUIT, you can compare the effects of market volatilities on DAIRY FARM and JABIL CIRCUIT 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 DAIRY FARM with a short position of JABIL CIRCUIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and JABIL CIRCUIT.

Diversification Opportunities for DAIRY FARM and JABIL CIRCUIT

0.23

Correlation Coefficient

DAIRY FARM  JABIL CIRCUIT

Modest diversification

The 3 months correlation between DAIRY and JABIL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and JABIL CIRCUIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JABIL CIRCUIT and DAIRY FARM 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 DAIRY FARM INTL are associated (or correlated) with JABIL CIRCUIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JABIL CIRCUIT has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and JABIL CIRCUIT go up and down completely randomly.

Pair Corralation between DAIRY FARM and JABIL CIRCUIT

Assuming the 90 days trading horizon DAIRY FARM INTL is expected to under-perform the JABIL CIRCUIT. But the stock apears to be less risky and, when comparing its historical volatility, DAIRY FARM INTL is 2.12 times less risky than JABIL CIRCUIT. The stock trades about -0.11 of its potential returns per unit of risk. The JABIL CIRCUIT is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  12,770  in JABIL CIRCUIT on October 7, 2024 and sell it today you would earn a total of  1,070  from holding JABIL CIRCUIT or generate 8.38% return on investment over 90 days.

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

DAIRY FARM INTL  vs.  JABIL CIRCUIT

DAIRY FARM INTL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DAIRY FARM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JABIL CIRCUIT

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JABIL CIRCUIT are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, JABIL CIRCUIT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAIRY FARM and JABIL CIRCUIT

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

The idea behind DAIRY FARM INTL and JABIL CIRCUIT 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..