Correlation Between Superior Uniform and JAKKS Pacific

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

By analyzing existing cross correlation between Superior Uniform Group and JAKKS Pacific, you can compare the effects of market volatilities on Superior Uniform and JAKKS Pacific 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 Superior Uniform with a short position of JAKKS Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Uniform and JAKKS Pacific.

Diversification Opportunities for Superior Uniform and JAKKS Pacific

0.48

Correlation Coefficient

Superior Uniform  JAKKS Pacific

Very weak diversification

The 3 months correlation between Superior and JAKKS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Superior Uniform Group and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Superior Uniform 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 Superior Uniform Group are associated (or correlated) with JAKKS Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAKKS Pacific has no effect on the direction of Superior Uniform i.e., Superior Uniform and JAKKS Pacific go up and down completely randomly.

Pair Corralation between Superior Uniform and JAKKS Pacific

Considering the 90-day investment horizon Superior Uniform is expected to generate 2.14 times less return on investment than JAKKS Pacific. But when comparing it to its historical volatility, Superior Uniform Group is 1.31 times less risky than JAKKS Pacific. It trades about 0.05 of its potential returns per unit of risk. JAKKS Pacific is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,552  in JAKKS Pacific on October 9, 2024 and sell it today you would earn a total of  300.00  from holding JAKKS Pacific or generate 11.76% return on investment over 90 days.

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

Superior Uniform Group  vs.  JAKKS Pacific

Superior Uniform

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Uniform Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Superior Uniform may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JAKKS Pacific

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JAKKS Pacific are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, JAKKS Pacific disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Uniform and JAKKS Pacific

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

The idea behind Superior Uniform Group and JAKKS Pacific 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.