Correlation Between Junee Limited and Jacobs Solutions

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

By analyzing existing cross correlation between Junee Limited Ordinary and Jacobs Solutions, you can compare the effects of market volatilities on Junee Limited and Jacobs Solutions 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 Junee Limited with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Junee Limited and Jacobs Solutions.

Diversification Opportunities for Junee Limited and Jacobs Solutions

-0.32

Correlation Coefficient

Junee Limited  Jacobs Solutions

Very good diversification

The 3 months correlation between Junee and Jacobs is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Junee Limited Ordinary and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Junee Limited 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 Junee Limited Ordinary are associated (or correlated) with Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Junee Limited i.e., Junee Limited and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Junee Limited and Jacobs Solutions

Given the investment horizon of 90 days Junee Limited Ordinary is expected to generate 4.88 times more return on investment than Jacobs Solutions. However, Junee Limited is 4.88 times more volatile than Jacobs Solutions. It trades about 0.28 of its potential returns per unit of risk. Jacobs Solutions is currently generating about -0.11 per unit of risk. If you would invest  390.00  in Junee Limited Ordinary on December 27, 2024 and sell it today you would earn a total of  539.00  from holding Junee Limited Ordinary or generate 138.21% return on investment over 90 days.

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

Junee Limited Ordinary  vs.  Jacobs Solutions

Junee Limited Ordinary

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Junee Limited Ordinary are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Junee Limited exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jacobs Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jacobs Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Junee Limited and Jacobs Solutions

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

The idea behind Junee Limited Ordinary and Jacobs Solutions 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.