Correlation Between Jamieson Wellness and Saville Resources

Can any of the company-specific risk be diversified away by investing in both Jamieson Wellness and Saville Resources 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 Jamieson Wellness and Saville Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Jamieson Wellness and Saville Resources

0.22

Correlation Coefficient

Jamieson Wellness  Saville Resources

Modest diversification

The 3 months correlation between Jamieson and Saville is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jamieson Wellness and Saville Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saville Resources and Jamieson Wellness 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 Jamieson Wellness are associated (or correlated) with Saville Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saville Resources has no effect on the direction of Jamieson Wellness i.e., Jamieson Wellness and Saville Resources go up and down completely randomly.

Pair Corralation between Jamieson Wellness and Saville Resources

Assuming the 90 days trading horizon Jamieson Wellness is expected to generate 32.42 times less return on investment than Saville Resources. But when comparing it to its historical volatility, Jamieson Wellness is 4.6 times less risky than Saville Resources. It trades about 0.03 of its potential returns per unit of risk. Saville Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Saville Resources on October 26, 2024 and sell it today you would earn a total of  18.00  from holding Saville Resources or generate 64.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.33%
Values	Daily Returns

Jamieson Wellness  vs.  Saville Resources

Jamieson Wellness

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jamieson Wellness are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jamieson Wellness is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Saville Resources

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Saville Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Saville Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jamieson Wellness and Saville Resources

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

The idea behind Jamieson Wellness and Saville Resources 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.