Correlation Between John B and BioAdaptives

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

Diversification Opportunities for John B and BioAdaptives

-0.51

Correlation Coefficient

John B  BioAdaptives

Excellent diversification

The 3 months correlation between John and BioAdaptives is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and BioAdaptives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioAdaptives 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 BioAdaptives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioAdaptives has no effect on the direction of John B i.e., John B and BioAdaptives go up and down completely randomly.

Pair Corralation between John B and BioAdaptives

Given the investment horizon of 90 days John B is expected to generate 25.99 times less return on investment than BioAdaptives. But when comparing it to its historical volatility, John B Sanfilippo is 43.51 times less risky than BioAdaptives. It trades about 0.32 of its potential returns per unit of risk. BioAdaptives is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6.00  in BioAdaptives on September 16, 2024 and sell it today you would earn a total of  4.00  from holding BioAdaptives or generate 66.67% return on investment over 90 days.

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

John B Sanfilippo  vs.  BioAdaptives

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.

BioAdaptives

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioAdaptives are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BioAdaptives unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John B and BioAdaptives

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

The idea behind John B Sanfilippo and BioAdaptives 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.