Correlation Between Juhayna Food and Natural Gas

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

By analyzing existing cross correlation between Juhayna Food Industries and Natural Gas Mining, you can compare the effects of market volatilities on Juhayna Food and Natural Gas 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 Juhayna Food with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juhayna Food and Natural Gas.

Diversification Opportunities for Juhayna Food and Natural Gas

0.38

Correlation Coefficient

Juhayna Food  Natural Gas

Weak diversification

The 3 months correlation between Juhayna and Natural is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Juhayna Food Industries and Natural Gas Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Mining and Juhayna Food 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 Juhayna Food Industries are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Mining has no effect on the direction of Juhayna Food i.e., Juhayna Food and Natural Gas go up and down completely randomly.

Pair Corralation between Juhayna Food and Natural Gas

Assuming the 90 days trading horizon Juhayna Food Industries is expected to generate 0.84 times more return on investment than Natural Gas. However, Juhayna Food Industries is 1.2 times less risky than Natural Gas. It trades about 0.11 of its potential returns per unit of risk. Natural Gas Mining is currently generating about 0.02 per unit of risk. If you would invest  3,165  in Juhayna Food Industries on October 9, 2024 and sell it today you would earn a total of  120.00  from holding Juhayna Food Industries or generate 3.79% return on investment over 90 days.

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

Juhayna Food Industries  vs.  Natural Gas Mining

Juhayna Food Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Juhayna Food Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Juhayna Food reported solid returns over the last few months and may actually be approaching a breakup point.

Natural Gas Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Gas Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Juhayna Food and Natural Gas

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

The idea behind Juhayna Food Industries and Natural Gas Mining 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.