Correlation Between JGC Corp and Arcadis NV

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

By analyzing existing cross correlation between JGC Corp and Arcadis NV, you can compare the effects of market volatilities on JGC Corp and Arcadis NV 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 JGC Corp with a short position of Arcadis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGC Corp and Arcadis NV.

Diversification Opportunities for JGC Corp and Arcadis NV

0.41

Correlation Coefficient

JGC Corp  Arcadis NV

Very weak diversification

The 3 months correlation between JGC and Arcadis is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding JGC Corp and Arcadis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadis NV and JGC Corp 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 JGC Corp are associated (or correlated) with Arcadis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadis NV has no effect on the direction of JGC Corp i.e., JGC Corp and Arcadis NV go up and down completely randomly.

Pair Corralation between JGC Corp and Arcadis NV

Assuming the 90 days horizon JGC Corp is expected to generate 2.05 times more return on investment than Arcadis NV. However, JGC Corp is 2.05 times more volatile than Arcadis NV. It trades about 0.02 of its potential returns per unit of risk. Arcadis NV is currently generating about -0.16 per unit of risk. If you would invest  1,694  in JGC Corp on September 13, 2024 and sell it today you would earn a total of  19.00  from holding JGC Corp or generate 1.12% return on investment over 90 days.

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

JGC Corp  vs.  Arcadis NV

JGC Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGC Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, JGC Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Arcadis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcadis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with JGC Corp and Arcadis NV

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

The idea behind JGC Corp and Arcadis NV 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.