Correlation Between JS Investments and Grays Leasing

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

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

Diversification Opportunities for JS Investments and Grays Leasing

0.52

Correlation Coefficient

JS Investments  Grays Leasing

Very weak diversification

The 3 months correlation between JSIL and Grays is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing and JS Investments 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 Investments are associated (or correlated) with Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of JS Investments i.e., JS Investments and Grays Leasing go up and down completely randomly.

Pair Corralation between JS Investments and Grays Leasing

Assuming the 90 days trading horizon JS Investments is expected to generate 0.88 times more return on investment than Grays Leasing. However, JS Investments is 1.13 times less risky than Grays Leasing. It trades about -0.02 of its potential returns per unit of risk. Grays Leasing is currently generating about -0.07 per unit of risk. If you would invest  2,371  in JS Investments on December 30, 2024 and sell it today you would lose (170.00) from holding JS Investments or give up 7.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.22%
Values	Daily Returns

JS Investments  vs.  Grays Leasing

JS Investments

Risk-Adjusted Performance

Very Weak

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

Grays Leasing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grays Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JS Investments and Grays Leasing

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

The idea behind JS Investments and Grays Leasing 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.