Correlation Between Jat Holdings and Hunas Falls

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

By analyzing existing cross correlation between Jat Holdings PLC and Hunas Falls Hotels, you can compare the effects of market volatilities on Jat Holdings and Hunas Falls 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 Jat Holdings with a short position of Hunas Falls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jat Holdings and Hunas Falls.

Diversification Opportunities for Jat Holdings and Hunas Falls

-0.21

Correlation Coefficient

Jat Holdings  Hunas Falls

Very good diversification

The 3 months correlation between Jat and Hunas is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Jat Holdings PLC and Hunas Falls Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunas Falls Hotels and Jat Holdings 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 Jat Holdings PLC are associated (or correlated) with Hunas Falls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunas Falls Hotels has no effect on the direction of Jat Holdings i.e., Jat Holdings and Hunas Falls go up and down completely randomly.

Pair Corralation between Jat Holdings and Hunas Falls

Assuming the 90 days trading horizon Jat Holdings PLC is expected to generate 0.72 times more return on investment than Hunas Falls. However, Jat Holdings PLC is 1.39 times less risky than Hunas Falls. It trades about 0.08 of its potential returns per unit of risk. Hunas Falls Hotels is currently generating about 0.01 per unit of risk. If you would invest  1,200  in Jat Holdings PLC on October 7, 2024 and sell it today you would earn a total of  1,300  from holding Jat Holdings PLC or generate 108.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.15%
Values	Daily Returns

Jat Holdings PLC  vs.  Hunas Falls Hotels

Jat Holdings PLC

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jat Holdings PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jat Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Hunas Falls Hotels

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hunas Falls Hotels are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hunas Falls is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jat Holdings and Hunas Falls

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

The idea behind Jat Holdings PLC and Hunas Falls Hotels 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.