Correlation Between JBS SA and Natures Sunshine

Can any of the company-specific risk be diversified away by investing in both JBS SA and Natures Sunshine 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 JBS SA and Natures Sunshine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JBS SA and Natures Sunshine Products, you can compare the effects of market volatilities on JBS SA and Natures Sunshine 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 JBS SA with a short position of Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBS SA and Natures Sunshine.

Diversification Opportunities for JBS SA and Natures Sunshine

0.44

Correlation Coefficient

JBS SA  Natures Sunshine

Very weak diversification

The 3 months correlation between JBS and Natures is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding JBS SA and Natures Sunshine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Sunshine Products and JBS SA 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 JBS SA are associated (or correlated) with Natures Sunshine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Sunshine Products has no effect on the direction of JBS SA i.e., JBS SA and Natures Sunshine go up and down completely randomly.

Pair Corralation between JBS SA and Natures Sunshine

Assuming the 90 days horizon JBS SA is expected to generate 2.09 times less return on investment than Natures Sunshine. But when comparing it to its historical volatility, JBS SA is 2.04 times less risky than Natures Sunshine. It trades about 0.13 of its potential returns per unit of risk. Natures Sunshine Products is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,302  in Natures Sunshine Products on September 13, 2024 and sell it today you would earn a total of  267.00  from holding Natures Sunshine Products or generate 20.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

JBS SA  vs.  Natures Sunshine Products

JBS SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, JBS SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Natures Sunshine Products

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Natures Sunshine Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Natures Sunshine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JBS SA and Natures Sunshine

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

The idea behind JBS SA and Natures Sunshine Products 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.