Correlation Between PM Capital and JB Hi

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

By analyzing existing cross correlation between PM Capital Global and JB Hi Fi, you can compare the effects of market volatilities on PM Capital and JB Hi 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 PM Capital with a short position of JB Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and JB Hi.

Diversification Opportunities for PM Capital and JB Hi

0.0

Correlation Coefficient

PM Capital  JB Hi

Pay attention - limited upside

The 3 months correlation between PGF and JBH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and JB Hi Fi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hi Fi and PM Capital 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 PM Capital Global are associated (or correlated) with JB Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hi Fi has no effect on the direction of PM Capital i.e., PM Capital and JB Hi go up and down completely randomly.

Pair Corralation between PM Capital and JB Hi

If you would invest  8,231  in JB Hi Fi on September 12, 2024 and sell it today you would earn a total of  1,085  from holding JB Hi Fi or generate 13.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

PM Capital Global  vs.  JB Hi Fi

PM Capital Global

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days PM Capital Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, PM Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

JB Hi Fi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hi Fi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, JB Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PM Capital and JB Hi

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

The idea behind PM Capital Global and JB Hi Fi 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..