Correlation Between JLT MOBILE and Renesas Electronics

Can any of the company-specific risk be diversified away by investing in both JLT MOBILE and Renesas Electronics 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 JLT MOBILE and Renesas Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JLT MOBILE PUTER and Renesas Electronics, you can compare the effects of market volatilities on JLT MOBILE and Renesas Electronics 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 JLT MOBILE with a short position of Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLT MOBILE and Renesas Electronics.

Diversification Opportunities for JLT MOBILE and Renesas Electronics

0.45

Correlation Coefficient

JLT MOBILE  Renesas Electronics

Very weak diversification

The 3 months correlation between JLT and Renesas is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JLT MOBILE PUTER and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics and JLT MOBILE 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 JLT MOBILE PUTER are associated (or correlated) with Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of JLT MOBILE i.e., JLT MOBILE and Renesas Electronics go up and down completely randomly.

Pair Corralation between JLT MOBILE and Renesas Electronics

Assuming the 90 days trading horizon JLT MOBILE PUTER is expected to under-perform the Renesas Electronics. In addition to that, JLT MOBILE is 1.14 times more volatile than Renesas Electronics. It trades about -0.14 of its total potential returns per unit of risk. Renesas Electronics is currently generating about 0.06 per unit of volatility. If you would invest  1,232  in Renesas Electronics on September 24, 2024 and sell it today you would earn a total of  33.00  from holding Renesas Electronics or generate 2.68% return on investment over 90 days.

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

JLT MOBILE PUTER  vs.  Renesas Electronics

JLT MOBILE PUTER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JLT MOBILE PUTER 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Renesas Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renesas Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Renesas Electronics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JLT MOBILE and Renesas Electronics

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

The idea behind JLT MOBILE PUTER and Renesas Electronics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.