Correlation Between JABIL CIRCUIT and DAIRY FARM

Can any of the company-specific risk be diversified away by investing in both JABIL CIRCUIT and DAIRY FARM 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 JABIL CIRCUIT and DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JABIL CIRCUIT and DAIRY FARM INTL, you can compare the effects of market volatilities on JABIL CIRCUIT and DAIRY FARM 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 JABIL CIRCUIT with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of JABIL CIRCUIT and DAIRY FARM.

Diversification Opportunities for JABIL CIRCUIT and DAIRY FARM

0.91

Correlation Coefficient

JABIL CIRCUIT  DAIRY FARM

Almost no diversification

The 3 months correlation between JABIL and DAIRY is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding JABIL CIRCUIT and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL and JABIL CIRCUIT 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 JABIL CIRCUIT are associated (or correlated) with DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of JABIL CIRCUIT i.e., JABIL CIRCUIT and DAIRY FARM go up and down completely randomly.

Pair Corralation between JABIL CIRCUIT and DAIRY FARM

Assuming the 90 days trading horizon JABIL CIRCUIT is expected to generate 0.53 times more return on investment than DAIRY FARM. However, JABIL CIRCUIT is 1.88 times less risky than DAIRY FARM. It trades about 0.27 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.06 per unit of risk. If you would invest  12,110  in JABIL CIRCUIT on September 18, 2024 and sell it today you would earn a total of  690.00  from holding JABIL CIRCUIT or generate 5.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

JABIL CIRCUIT  vs.  DAIRY FARM INTL

JABIL CIRCUIT

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JABIL CIRCUIT are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, JABIL CIRCUIT exhibited solid returns over the last few months and may actually be approaching a breakup point.

DAIRY FARM INTL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DAIRY FARM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JABIL CIRCUIT and DAIRY FARM

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

The idea behind JABIL CIRCUIT and DAIRY FARM INTL 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.