Correlation Between JS Global and Packages

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

By analyzing existing cross correlation between JS Global Banking and Packages, you can compare the effects of market volatilities on JS Global and Packages 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 JS Global with a short position of Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Global and Packages.

Diversification Opportunities for JS Global and Packages

-0.04

Correlation Coefficient

JS Global  Packages

Good diversification

The 3 months correlation between JSGBETF and Packages is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding JS Global Banking and Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packages and JS Global 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 JS Global Banking are associated (or correlated) with Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packages has no effect on the direction of JS Global i.e., JS Global and Packages go up and down completely randomly.

Pair Corralation between JS Global and Packages

Assuming the 90 days trading horizon JS Global Banking is expected to under-perform the Packages. In addition to that, JS Global is 1.3 times more volatile than Packages. It trades about -0.07 of its total potential returns per unit of risk. Packages is currently generating about 0.0 per unit of volatility. If you would invest  58,845  in Packages on December 25, 2024 and sell it today you would lose (453.00) from holding Packages or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

JS Global Banking  vs.  Packages

JS Global Banking

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Global Banking has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Packages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Packages has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Packages is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JS Global and Packages

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

The idea behind JS Global Banking and Packages 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.