Correlation Between Honeywell International and Jardine Cycle

Can any of the company-specific risk be diversified away by investing in both Honeywell International and Jardine Cycle 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 Honeywell International and Jardine Cycle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Honeywell International and Jardine Cycle Carriage, you can compare the effects of market volatilities on Honeywell International and Jardine Cycle 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 Honeywell International with a short position of Jardine Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Jardine Cycle.

Diversification Opportunities for Honeywell International and Jardine Cycle

-0.26

Correlation Coefficient

Honeywell International  Jardine Cycle

Very good diversification

The 3 months correlation between Honeywell and Jardine is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Jardine Cycle Carriage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Cycle Carriage and Honeywell International 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 Honeywell International are associated (or correlated) with Jardine Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Cycle Carriage has no effect on the direction of Honeywell International i.e., Honeywell International and Jardine Cycle go up and down completely randomly.

Pair Corralation between Honeywell International and Jardine Cycle

Considering the 90-day investment horizon Honeywell International is expected to under-perform the Jardine Cycle. But the stock apears to be less risky and, when comparing its historical volatility, Honeywell International is 1.13 times less risky than Jardine Cycle. The stock trades about -0.08 of its potential returns per unit of risk. The Jardine Cycle Carriage is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,950  in Jardine Cycle Carriage on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Jardine Cycle Carriage or generate 0.0% return on investment over 90 days.

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

Honeywell International  vs.  Jardine Cycle Carriage

Honeywell International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Honeywell International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Jardine Cycle Carriage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jardine Cycle Carriage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Jardine Cycle is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Honeywell International and Jardine Cycle

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

The idea behind Honeywell International and Jardine Cycle Carriage 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.