Correlation Between KOMATSU and Jupiter Fund

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

By analyzing existing cross correlation between KOMATSU LTD SPONS and Jupiter Fund Management, you can compare the effects of market volatilities on KOMATSU and Jupiter Fund 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 KOMATSU with a short position of Jupiter Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOMATSU and Jupiter Fund.

Diversification Opportunities for KOMATSU and Jupiter Fund

0.15

Correlation Coefficient

KOMATSU  Jupiter Fund

Average diversification

The 3 months correlation between KOMATSU and Jupiter is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding KOMATSU LTD SPONS and Jupiter Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Fund Management and KOMATSU 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 KOMATSU LTD SPONS are associated (or correlated) with Jupiter Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Fund Management has no effect on the direction of KOMATSU i.e., KOMATSU and Jupiter Fund go up and down completely randomly.

Pair Corralation between KOMATSU and Jupiter Fund

Assuming the 90 days trading horizon KOMATSU LTD SPONS is expected to generate 0.69 times more return on investment than Jupiter Fund. However, KOMATSU LTD SPONS is 1.44 times less risky than Jupiter Fund. It trades about 0.04 of its potential returns per unit of risk. Jupiter Fund Management is currently generating about -0.01 per unit of risk. If you would invest  1,888  in KOMATSU LTD SPONS on October 4, 2024 and sell it today you would earn a total of  732.00  from holding KOMATSU LTD SPONS or generate 38.77% return on investment over 90 days.

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

KOMATSU LTD SPONS  vs.  Jupiter Fund Management

KOMATSU LTD SPONS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KOMATSU LTD SPONS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, KOMATSU may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jupiter Fund Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter Fund Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Jupiter Fund is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KOMATSU and Jupiter Fund

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

The idea behind KOMATSU LTD SPONS and Jupiter Fund Management 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 Transaction History module to view history of all your transactions and understand their impact on performance.