Correlation Between John B and Ajinomoto

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

By analyzing existing cross correlation between John B Sanfilippo and Ajinomoto Co ADR, you can compare the effects of market volatilities on John B and Ajinomoto 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 John B with a short position of Ajinomoto. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Ajinomoto.

Diversification Opportunities for John B and Ajinomoto

-0.44

Correlation Coefficient

John B  Ajinomoto

Very good diversification

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

Pair Corralation between John B and Ajinomoto

Given the investment horizon of 90 days John B Sanfilippo is expected to generate 0.97 times more return on investment than Ajinomoto. However, John B Sanfilippo is 1.03 times less risky than Ajinomoto. It trades about 0.28 of its potential returns per unit of risk. Ajinomoto Co ADR is currently generating about 0.2 per unit of risk. If you would invest  8,254  in John B Sanfilippo on September 19, 2024 and sell it today you would earn a total of  663.00  from holding John B Sanfilippo or generate 8.03% return on investment over 90 days.

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

John B Sanfilippo  vs.  Ajinomoto Co ADR

John B Sanfilippo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ajinomoto Co ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ajinomoto Co ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Ajinomoto may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with John B and Ajinomoto

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

The idea behind John B Sanfilippo and Ajinomoto Co ADR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.