Correlation Between J+J SNACK and ECHO INVESTMENT

Can any of the company-specific risk be diversified away by investing in both J+J SNACK and ECHO INVESTMENT 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 J+J SNACK and ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JJ SNACK FOODS and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on J+J SNACK and ECHO INVESTMENT 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 J+J SNACK with a short position of ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and ECHO INVESTMENT.

Diversification Opportunities for J+J SNACK and ECHO INVESTMENT

0.55

Correlation Coefficient

J+J SNACK  ECHO INVESTMENT

Very weak diversification

The 3 months correlation between J+J and ECHO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of J+J SNACK i.e., J+J SNACK and ECHO INVESTMENT go up and down completely randomly.

Pair Corralation between J+J SNACK and ECHO INVESTMENT

Assuming the 90 days trading horizon JJ SNACK FOODS is expected to under-perform the ECHO INVESTMENT. In addition to that, J+J SNACK is 1.29 times more volatile than ECHO INVESTMENT ZY. It trades about -0.17 of its total potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about -0.06 per unit of volatility. If you would invest  107.00  in ECHO INVESTMENT ZY on December 27, 2024 and sell it today you would lose (7.00) from holding ECHO INVESTMENT ZY or give up 6.54% of portfolio value over 90 days.

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

JJ SNACK FOODS  vs.  ECHO INVESTMENT ZY

JJ SNACK FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days JJ SNACK FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ECHO INVESTMENT ZY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ECHO INVESTMENT ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ECHO INVESTMENT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with J+J SNACK and ECHO INVESTMENT

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

The idea behind JJ SNACK FOODS and ECHO INVESTMENT ZY 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 CEOs Directory module to screen CEOs from public companies around the world.