Correlation Between Public Power and Jumbo SA

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

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

Diversification Opportunities for Public Power and Jumbo SA

0.32

Correlation Coefficient

Public Power  Jumbo SA

Weak diversification

The 3 months correlation between Public and Jumbo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Public Power and Jumbo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumbo SA and Public Power 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 Public Power are associated (or correlated) with Jumbo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jumbo SA has no effect on the direction of Public Power i.e., Public Power and Jumbo SA go up and down completely randomly.

Pair Corralation between Public Power and Jumbo SA

Assuming the 90 days trading horizon Public Power is expected to generate 1.11 times more return on investment than Jumbo SA. However, Public Power is 1.11 times more volatile than Jumbo SA. It trades about 0.1 of its potential returns per unit of risk. Jumbo SA is currently generating about 0.04 per unit of risk. If you would invest  1,191  in Public Power on October 26, 2024 and sell it today you would earn a total of  95.00  from holding Public Power or generate 7.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Public Power  vs.  Jumbo SA

Public Power

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Public Power are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Public Power may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jumbo SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jumbo SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Jumbo SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Public Power and Jumbo SA

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

The idea behind Public Power and Jumbo SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.