Correlation Between American States and Jacquet Metal

Can any of the company-specific risk be diversified away by investing in both American States and Jacquet Metal 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 American States and Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American States Water and Jacquet Metal Service, you can compare the effects of market volatilities on American States and Jacquet Metal 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 American States with a short position of Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American States and Jacquet Metal.

Diversification Opportunities for American States and Jacquet Metal

-0.38

Correlation Coefficient

American States  Jacquet Metal

Very good diversification

The 3 months correlation between American and Jacquet is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding American States Water and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and American States 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 American States Water are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of American States i.e., American States and Jacquet Metal go up and down completely randomly.

Pair Corralation between American States and Jacquet Metal

Assuming the 90 days trading horizon American States Water is expected to generate 0.88 times more return on investment than Jacquet Metal. However, American States Water is 1.13 times less risky than Jacquet Metal. It trades about 0.02 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.0 per unit of risk. If you would invest  6,910  in American States Water on October 9, 2024 and sell it today you would earn a total of  445.00  from holding American States Water or generate 6.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

American States Water  vs.  Jacquet Metal Service

American States Water

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jacquet Metal Service

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jacquet Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American States and Jacquet Metal

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

The idea behind American States Water and Jacquet Metal Service 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.