Correlation Between JB Hi-Fi and Perpetual Credit

Can any of the company-specific risk be diversified away by investing in both JB Hi-Fi and Perpetual Credit 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 JB Hi-Fi and Perpetual Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JB Hi Fi and Perpetual Credit Income, you can compare the effects of market volatilities on JB Hi-Fi and Perpetual Credit 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 JB Hi-Fi with a short position of Perpetual Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hi-Fi and Perpetual Credit.

Diversification Opportunities for JB Hi-Fi and Perpetual Credit

0.18

Correlation Coefficient

JB Hi-Fi  Perpetual Credit

Average diversification

The 3 months correlation between JBH and Perpetual is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JB Hi Fi and Perpetual Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Credit Income and JB Hi-Fi 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 JB Hi Fi are associated (or correlated) with Perpetual Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Credit Income has no effect on the direction of JB Hi-Fi i.e., JB Hi-Fi and Perpetual Credit go up and down completely randomly.

Pair Corralation between JB Hi-Fi and Perpetual Credit

Assuming the 90 days trading horizon JB Hi Fi is expected to generate 1.29 times more return on investment than Perpetual Credit. However, JB Hi-Fi is 1.29 times more volatile than Perpetual Credit Income. It trades about 0.01 of its potential returns per unit of risk. Perpetual Credit Income is currently generating about 0.01 per unit of risk. If you would invest  9,492  in JB Hi Fi on December 29, 2024 and sell it today you would lose (25.00) from holding JB Hi Fi or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

JB Hi Fi  vs.  Perpetual Credit Income

JB Hi Fi

Risk-Adjusted Performance

Very Weak

Over the last 90 days JB Hi Fi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, JB Hi-Fi is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Perpetual Credit Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perpetual Credit Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Perpetual Credit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JB Hi-Fi and Perpetual Credit

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

The idea behind JB Hi Fi and Perpetual Credit Income 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.