Correlation Between JBS ON and Coty

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

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

Diversification Opportunities for JBS ON and Coty

0.82

Correlation Coefficient

JBS ON  Coty

Very poor diversification

The 3 months correlation between JBS and Coty is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JBS ON NM and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and JBS ON 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 ON NM are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of JBS ON i.e., JBS ON and Coty go up and down completely randomly.

Pair Corralation between JBS ON and Coty

Assuming the 90 days trading horizon JBS ON NM is expected to generate 0.87 times more return on investment than Coty. However, JBS ON NM is 1.15 times less risky than Coty. It trades about -0.16 of its potential returns per unit of risk. Coty Inc is currently generating about -0.18 per unit of risk. If you would invest  3,849  in JBS ON NM on December 3, 2024 and sell it today you would lose (744.00) from holding JBS ON NM or give up 19.33% of portfolio value over 90 days.

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

JBS ON NM  vs.  Coty Inc

JBS ON NM

Risk-Adjusted Performance

Very Weak

Over the last 90 days JBS ON NM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Coty Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JBS ON and Coty

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

The idea behind JBS ON NM and Coty Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.