Correlation Between JB Hunt and Shengfeng Development

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

By analyzing existing cross correlation between JB Hunt Transport and Shengfeng Development Limited, you can compare the effects of market volatilities on JB Hunt and Shengfeng Development 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 Hunt with a short position of Shengfeng Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and Shengfeng Development.

Diversification Opportunities for JB Hunt and Shengfeng Development

0.26

Correlation Coefficient

JB Hunt  Shengfeng Development

Modest diversification

The 3 months correlation between JBHT and Shengfeng is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Shengfeng Development Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengfeng Development and JB Hunt 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 Hunt Transport are associated (or correlated) with Shengfeng Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengfeng Development has no effect on the direction of JB Hunt i.e., JB Hunt and Shengfeng Development go up and down completely randomly.

Pair Corralation between JB Hunt and Shengfeng Development

Given the investment horizon of 90 days JB Hunt Transport is expected to generate 0.49 times more return on investment than Shengfeng Development. However, JB Hunt Transport is 2.03 times less risky than Shengfeng Development. It trades about 0.01 of its potential returns per unit of risk. Shengfeng Development Limited is currently generating about -0.09 per unit of risk. If you would invest  17,425  in JB Hunt Transport on October 15, 2024 and sell it today you would earn a total of  4.00  from holding JB Hunt Transport or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JB Hunt Transport  vs.  Shengfeng Development Limited

JB Hunt Transport

Risk-Adjusted Performance

0 of 100

Weak

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

Shengfeng Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengfeng Development Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with JB Hunt and Shengfeng Development

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

The idea behind JB Hunt Transport and Shengfeng Development Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.