Correlation Between Jack Nathan and Carebook Technologies

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

By analyzing existing cross correlation between Jack Nathan Medical and Carebook Technologies, you can compare the effects of market volatilities on Jack Nathan and Carebook Technologies 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 Jack Nathan with a short position of Carebook Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack Nathan and Carebook Technologies.

Diversification Opportunities for Jack Nathan and Carebook Technologies

0.33

Correlation Coefficient

Jack Nathan  Carebook Technologies

Weak diversification

The 3 months correlation between Jack and Carebook is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jack Nathan Medical and Carebook Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carebook Technologies and Jack Nathan 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 Jack Nathan Medical are associated (or correlated) with Carebook Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carebook Technologies has no effect on the direction of Jack Nathan i.e., Jack Nathan and Carebook Technologies go up and down completely randomly.

Pair Corralation between Jack Nathan and Carebook Technologies

Assuming the 90 days horizon Jack Nathan is expected to generate 2.55 times less return on investment than Carebook Technologies. But when comparing it to its historical volatility, Jack Nathan Medical is 1.07 times less risky than Carebook Technologies. It trades about 0.04 of its potential returns per unit of risk. Carebook Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Carebook Technologies on October 25, 2024 and sell it today you would earn a total of  2.50  from holding Carebook Technologies or generate 35.71% return on investment over 90 days.

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

Jack Nathan Medical  vs.  Carebook Technologies

Jack Nathan Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Nathan Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Jack Nathan showed solid returns over the last few months and may actually be approaching a breakup point.

Carebook Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carebook Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Carebook Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jack Nathan and Carebook Technologies

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

The idea behind Jack Nathan Medical and Carebook Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.