Correlation Between JSL SA and JHSF Participaes

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

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

Diversification Opportunities for JSL SA and JHSF Participaes

0.09

Correlation Coefficient

JSL SA  JHSF Participaes

Significant diversification

The 3 months correlation between JSL and JHSF is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding JSL SA and JHSF Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JHSF Participaes and JSL SA 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 JSL SA are associated (or correlated) with JHSF Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JHSF Participaes has no effect on the direction of JSL SA i.e., JSL SA and JHSF Participaes go up and down completely randomly.

Pair Corralation between JSL SA and JHSF Participaes

Assuming the 90 days trading horizon JSL SA is expected to under-perform the JHSF Participaes. In addition to that, JSL SA is 1.69 times more volatile than JHSF Participaes SA. It trades about -0.1 of its total potential returns per unit of risk. JHSF Participaes SA is currently generating about -0.11 per unit of volatility. If you would invest  439.00  in JHSF Participaes SA on September 17, 2024 and sell it today you would lose (48.00) from holding JHSF Participaes SA or give up 10.93% of portfolio value over 90 days.

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

JSL SA  vs.  JHSF Participaes SA

JSL SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSL SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JHSF Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JHSF Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with JSL SA and JHSF Participaes

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

The idea behind JSL SA and JHSF Participaes SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.