Correlation Between JB Hi-Fi and Thorney Technologies

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

Diversification Opportunities for JB Hi-Fi and Thorney Technologies

0.59

Correlation Coefficient

JB Hi-Fi  Thorney Technologies

Very weak diversification

The 3 months correlation between JBH and Thorney is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding JB Hi Fi and Thorney Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thorney Technologies 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 Thorney Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thorney Technologies has no effect on the direction of JB Hi-Fi i.e., JB Hi-Fi and Thorney Technologies go up and down completely randomly.

Pair Corralation between JB Hi-Fi and Thorney Technologies

Assuming the 90 days trading horizon JB Hi-Fi is expected to generate 6.99 times less return on investment than Thorney Technologies. But when comparing it to its historical volatility, JB Hi Fi is 2.27 times less risky than Thorney Technologies. It trades about 0.01 of its potential returns per unit of risk. Thorney Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Thorney Technologies on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Thorney Technologies or generate 0.0% return on investment over 90 days.

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

JB Hi Fi  vs.  Thorney Technologies

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.

Thorney Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thorney Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Thorney Technologies 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 Thorney Technologies

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

The idea behind JB Hi Fi and Thorney Technologies 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.