Correlation Between Ijj and Seafarer Exploration

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

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

Diversification Opportunities for Ijj and Seafarer Exploration

0.49

Correlation Coefficient

Ijj  Seafarer Exploration

Very weak diversification

The 3 months correlation between Ijj and Seafarer is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ijj Corp. and Seafarer Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seafarer Exploration and Ijj 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 Ijj Corporation are associated (or correlated) with Seafarer Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seafarer Exploration has no effect on the direction of Ijj i.e., Ijj and Seafarer Exploration go up and down completely randomly.

Pair Corralation between Ijj and Seafarer Exploration

Given the investment horizon of 90 days Ijj Corporation is expected to generate 4.91 times more return on investment than Seafarer Exploration. However, Ijj is 4.91 times more volatile than Seafarer Exploration. It trades about 0.09 of its potential returns per unit of risk. Seafarer Exploration is currently generating about 0.11 per unit of risk. If you would invest  0.04  in Ijj Corporation on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Ijj Corporation or generate 0.0% return on investment over 90 days.

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

Ijj Corp.  vs.  Seafarer Exploration

Ijj Corporation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ijj Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward-looking indicators, Ijj reported solid returns over the last few months and may actually be approaching a breakup point.

Seafarer Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seafarer Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Seafarer Exploration is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ijj and Seafarer Exploration

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

The idea behind Ijj Corporation and Seafarer Exploration 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.