Correlation Between Comfort Systems and JGC Corp

Can any of the company-specific risk be diversified away by investing in both Comfort Systems and JGC Corp 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 Comfort Systems and JGC Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comfort Systems USA and JGC Corp, you can compare the effects of market volatilities on Comfort Systems and JGC Corp 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 Comfort Systems with a short position of JGC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comfort Systems and JGC Corp.

Diversification Opportunities for Comfort Systems and JGC Corp

0.37

Correlation Coefficient

Comfort Systems  JGC Corp

Weak diversification

The 3 months correlation between Comfort and JGC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Comfort Systems USA and JGC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGC Corp and Comfort Systems 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 Comfort Systems USA are associated (or correlated) with JGC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGC Corp has no effect on the direction of Comfort Systems i.e., Comfort Systems and JGC Corp go up and down completely randomly.

Pair Corralation between Comfort Systems and JGC Corp

Considering the 90-day investment horizon Comfort Systems USA is expected to under-perform the JGC Corp. But the stock apears to be less risky and, when comparing its historical volatility, Comfort Systems USA is 1.03 times less risky than JGC Corp. The stock trades about -0.06 of its potential returns per unit of risk. The JGC Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,537  in JGC Corp on December 28, 2024 and sell it today you would earn a total of  2.00  from holding JGC Corp or generate 0.13% return on investment over 90 days.

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

Comfort Systems USA  vs.  JGC Corp

Comfort Systems USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comfort Systems USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JGC Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGC Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, JGC Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Comfort Systems and JGC Corp

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

The idea behind Comfort Systems USA and JGC 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.