Correlation Between Jay Mart and Advanced Information

Can any of the company-specific risk be diversified away by investing in both Jay Mart and Advanced Information 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 Advanced Information 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 Advanced Information Technology, you can compare the effects of market volatilities on Jay Mart and Advanced Information 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 Advanced Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jay Mart and Advanced Information.

Diversification Opportunities for Jay Mart and Advanced Information

-0.09

Correlation Coefficient

Jay Mart  Advanced Information

Good diversification

The 3 months correlation between Jay and Advanced is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jay Mart Public and Advanced Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Information 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 Advanced Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Information has no effect on the direction of Jay Mart i.e., Jay Mart and Advanced Information go up and down completely randomly.

Pair Corralation between Jay Mart and Advanced Information

Assuming the 90 days trading horizon Jay Mart Public is expected to generate 1.04 times more return on investment than Advanced Information. However, Jay Mart is 1.04 times more volatile than Advanced Information Technology. It trades about -0.06 of its potential returns per unit of risk. Advanced Information Technology is currently generating about -0.28 per unit of risk. If you would invest  1,330  in Jay Mart Public on September 26, 2024 and sell it today you would lose (30.00) from holding Jay Mart Public or give up 2.26% of portfolio value over 90 days.

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

Jay Mart Public  vs.  Advanced Information Technolog

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. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Advanced Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Advanced Information is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jay Mart and Advanced Information

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

The idea behind Jay Mart Public and Advanced Information Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.