Correlation Between Murree Brewery and JS Investments

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

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

Diversification Opportunities for Murree Brewery and JS Investments

0.21

Correlation Coefficient

Murree Brewery  JS Investments

Modest diversification

The 3 months correlation between Murree and JSIL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Murree Brewery and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Murree Brewery 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 Murree Brewery are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Murree Brewery i.e., Murree Brewery and JS Investments go up and down completely randomly.

Pair Corralation between Murree Brewery and JS Investments

Assuming the 90 days trading horizon Murree Brewery is expected to generate 0.5 times more return on investment than JS Investments. However, Murree Brewery is 2.02 times less risky than JS Investments. It trades about 0.39 of its potential returns per unit of risk. JS Investments is currently generating about -0.04 per unit of risk. If you would invest  68,982  in Murree Brewery on October 23, 2024 and sell it today you would earn a total of  12,120  from holding Murree Brewery or generate 17.57% return on investment over 90 days.

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

Murree Brewery  vs.  JS Investments

Murree Brewery

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Murree Brewery are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Murree Brewery disclosed solid returns over the last few months and may actually be approaching a breakup point.

JS Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Murree Brewery and JS Investments

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

The idea behind Murree Brewery and JS Investments 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.