Correlation Between JGC Corp and Bilfinger

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

By analyzing existing cross correlation between JGC Corp and Bilfinger SE ADR, you can compare the effects of market volatilities on JGC Corp and Bilfinger 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 Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGC Corp and Bilfinger.

Diversification Opportunities for JGC Corp and Bilfinger

-0.34

Correlation Coefficient

JGC Corp  Bilfinger

Very good diversification

The 3 months correlation between JGC and Bilfinger is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding JGC Corp and Bilfinger SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE ADR 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 Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE ADR has no effect on the direction of JGC Corp i.e., JGC Corp and Bilfinger go up and down completely randomly.

Pair Corralation between JGC Corp and Bilfinger

Assuming the 90 days horizon JGC Corp is expected to generate 6.71 times less return on investment than Bilfinger. In addition to that, JGC Corp is 1.17 times more volatile than Bilfinger SE ADR. It trades about 0.03 of its total potential returns per unit of risk. Bilfinger SE ADR is currently generating about 0.21 per unit of volatility. If you would invest  942.00  in Bilfinger SE ADR on December 29, 2024 and sell it today you would earn a total of  579.00  from holding Bilfinger SE ADR or generate 61.46% return on investment over 90 days.

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

JGC Corp  vs.  Bilfinger SE ADR

JGC Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGC Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, JGC Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bilfinger SE ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bilfinger SE ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bilfinger showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JGC Corp and Bilfinger

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

The idea behind JGC Corp and Bilfinger SE 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.