Correlation Between Jammin Java and Medican Enterprises

Can any of the company-specific risk be diversified away by investing in both Jammin Java and Medican Enterprises 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 Medican Enterprises 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 Medican Enterprises, you can compare the effects of market volatilities on Jammin Java and Medican Enterprises 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 Medican Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jammin Java and Medican Enterprises.

Diversification Opportunities for Jammin Java and Medican Enterprises

0.01

Correlation Coefficient

Jammin Java  Medican Enterprises

Significant diversification

The 3 months correlation between Jammin and Medican is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Jammin Java Corp and Medican Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medican Enterprises 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 Medican Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medican Enterprises has no effect on the direction of Jammin Java i.e., Jammin Java and Medican Enterprises go up and down completely randomly.

Pair Corralation between Jammin Java and Medican Enterprises

Given the investment horizon of 90 days Jammin Java Corp is expected to generate 1.15 times more return on investment than Medican Enterprises. However, Jammin Java is 1.15 times more volatile than Medican Enterprises. It trades about 0.23 of its potential returns per unit of risk. Medican Enterprises is currently generating about 0.21 per unit of risk. If you would invest  0.01  in Jammin Java Corp on December 2, 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jammin Java Corp  vs.  Medican Enterprises

Jammin Java Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jammin Java Corp are ranked lower than 18 (%) 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.

Medican Enterprises

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medican Enterprises are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Medican Enterprises displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jammin Java and Medican Enterprises

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

The idea behind Jammin Java Corp and Medican Enterprises 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.