Correlation Between Jammin Java and Bunzl Plc

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

By analyzing existing cross correlation between Jammin Java Corp and Bunzl plc, you can compare the effects of market volatilities on Jammin Java and Bunzl Plc 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 Jammin Java with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jammin Java and Bunzl Plc.

Diversification Opportunities for Jammin Java and Bunzl Plc

-0.25

Correlation Coefficient

Jammin Java  Bunzl Plc

Very good diversification

The 3 months correlation between Jammin and Bunzl is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jammin Java Corp and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Jammin Java 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 Jammin Java Corp are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Jammin Java i.e., Jammin Java and Bunzl Plc go up and down completely randomly.

Pair Corralation between Jammin Java and Bunzl Plc

Given the investment horizon of 90 days Jammin Java Corp is expected to generate 353.96 times more return on investment than Bunzl Plc. However, Jammin Java is 353.96 times more volatile than Bunzl plc. It trades about 0.4 of its potential returns per unit of risk. Bunzl plc is currently generating about -0.02 per unit of risk. If you would invest  0.01  in Jammin Java Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Jammin Java Corp 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

Jammin Java Corp  vs.  Bunzl plc

Jammin Java Corp

Risk-Adjusted Performance

31 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Jammin Java Corp are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Jammin Java displayed solid returns over the last few months and may actually be approaching a breakup point.

Bunzl plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jammin Java and Bunzl Plc

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

The idea behind Jammin Java Corp and Bunzl plc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..