Correlation Between Jay Mart and Quality Houses

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

By analyzing existing cross correlation between Jay Mart Public and Quality Houses Hotel, you can compare the effects of market volatilities on Jay Mart and Quality Houses 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 Jay Mart with a short position of Quality Houses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jay Mart and Quality Houses.

Diversification Opportunities for Jay Mart and Quality Houses

-0.36

Correlation Coefficient

Jay Mart  Quality Houses

Very good diversification

The 3 months correlation between Jay and Quality is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Jay Mart Public and Quality Houses Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Houses Hotel and Jay Mart 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 Jay Mart Public are associated (or correlated) with Quality Houses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Houses Hotel has no effect on the direction of Jay Mart i.e., Jay Mart and Quality Houses go up and down completely randomly.

Pair Corralation between Jay Mart and Quality Houses

Assuming the 90 days trading horizon Jay Mart Public is expected to generate 0.25 times more return on investment than Quality Houses. However, Jay Mart Public is 4.06 times less risky than Quality Houses. It trades about -0.16 of its potential returns per unit of risk. Quality Houses Hotel is currently generating about -0.13 per unit of risk. If you would invest  1,593  in Jay Mart Public on October 26, 2024 and sell it today you would lose (473.00) from holding Jay Mart Public or give up 29.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Jay Mart Public  vs.  Quality Houses Hotel

Jay Mart Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jay Mart Public has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Quality Houses Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quality Houses Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Jay Mart and Quality Houses

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

The idea behind Jay Mart Public and Quality Houses Hotel 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.