Correlation Between Jack Nathan and CareRx

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

Diversification Opportunities for Jack Nathan and CareRx

-0.13

Correlation Coefficient

Jack Nathan  CareRx

Good diversification

The 3 months correlation between Jack and CareRx is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Jack Nathan Medical and CareRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareRx 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 CareRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareRx has no effect on the direction of Jack Nathan i.e., Jack Nathan and CareRx go up and down completely randomly.

Pair Corralation between Jack Nathan and CareRx

Assuming the 90 days horizon Jack Nathan Medical is expected to generate 11.54 times more return on investment than CareRx. However, Jack Nathan is 11.54 times more volatile than CareRx. It trades about 0.13 of its potential returns per unit of risk. CareRx is currently generating about 0.22 per unit of risk. If you would invest  2.30  in Jack Nathan Medical on December 20, 2024 and sell it today you would earn a total of  0.30  from holding Jack Nathan Medical or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Jack Nathan Medical  vs.  CareRx

Jack Nathan Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Nathan Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Jack Nathan reported solid returns over the last few months and may actually be approaching a breakup point.

CareRx

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CareRx are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, CareRx reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jack Nathan and CareRx

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

The idea behind Jack Nathan Medical and CareRx 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.