Correlation Between JS Investments and WorldCall Telecom

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

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

Diversification Opportunities for JS Investments and WorldCall Telecom

0.74

Correlation Coefficient

JS Investments  WorldCall Telecom

Poor diversification

The 3 months correlation between JSIL and WorldCall is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and WorldCall Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WorldCall Telecom 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 WorldCall Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WorldCall Telecom has no effect on the direction of JS Investments i.e., JS Investments and WorldCall Telecom go up and down completely randomly.

Pair Corralation between JS Investments and WorldCall Telecom

Assuming the 90 days trading horizon JS Investments is expected to generate 1.2 times less return on investment than WorldCall Telecom. But when comparing it to its historical volatility, JS Investments is 1.13 times less risky than WorldCall Telecom. It trades about 0.15 of its potential returns per unit of risk. WorldCall Telecom is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  123.00  in WorldCall Telecom on September 26, 2024 and sell it today you would earn a total of  55.00  from holding WorldCall Telecom or generate 44.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

JS Investments  vs.  WorldCall Telecom

JS Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

WorldCall Telecom

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WorldCall Telecom are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, WorldCall Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JS Investments and WorldCall Telecom

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

The idea behind JS Investments and WorldCall Telecom 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.