Correlation Between Jacobs Solutions and Roadzen

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

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

Diversification Opportunities for Jacobs Solutions and Roadzen

-0.62

Correlation Coefficient

Jacobs Solutions  Roadzen

Excellent diversification

The 3 months correlation between Jacobs and Roadzen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Roadzen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roadzen and Jacobs Solutions 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 Jacobs Solutions are associated (or correlated) with Roadzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roadzen has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Roadzen go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Roadzen

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.06 times more return on investment than Roadzen. However, Jacobs Solutions is 17.13 times less risky than Roadzen. It trades about -0.08 of its potential returns per unit of risk. Roadzen is currently generating about -0.02 per unit of risk. If you would invest  13,512  in Jacobs Solutions on October 12, 2024 and sell it today you would lose (202.00) from holding Jacobs Solutions or give up 1.49% of portfolio value over 90 days.

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

Jacobs Solutions  vs.  Roadzen

Jacobs Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jacobs Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, Jacobs Solutions is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Roadzen

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roadzen are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Roadzen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Roadzen

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

The idea behind Jacobs Solutions and Roadzen 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.