Correlation Between Regal Investment and JB Hi

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

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

Diversification Opportunities for Regal Investment and JB Hi

0.14

Correlation Coefficient

Regal Investment  JB Hi

Average diversification

The 3 months correlation between Regal and JBH is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment 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 Regal Investment 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 Regal Investment 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 Regal Investment i.e., Regal Investment and JB Hi go up and down completely randomly.

Pair Corralation between Regal Investment and JB Hi

Assuming the 90 days trading horizon Regal Investment is expected to under-perform the JB Hi. In addition to that, Regal Investment is 1.18 times more volatile than JB Hi Fi. It trades about -0.28 of its total potential returns per unit of risk. JB Hi Fi is currently generating about 0.31 per unit of volatility. If you would invest  8,947  in JB Hi Fi on September 16, 2024 and sell it today you would earn a total of  553.00  from holding JB Hi Fi or generate 6.18% return on investment over 90 days.

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

Regal Investment  vs.  JB Hi Fi

Regal Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Regal Investment 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

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hi Fi are ranked lower than 14 (%) 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 Regal Investment and JB Hi

The main advantage of trading using opposite Regal Investment and JB Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Investment 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 Regal Investment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.