Correlation Between Sixty Six and JPX Global

Can any of the company-specific risk be diversified away by investing in both Sixty Six and JPX Global 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 Sixty Six and JPX Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sixty Six Oilfield and JPX Global, you can compare the effects of market volatilities on Sixty Six and JPX Global 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 Sixty Six with a short position of JPX Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixty Six and JPX Global.

Diversification Opportunities for Sixty Six and JPX Global

0.14

Correlation Coefficient

Sixty Six  JPX Global

Average diversification

The 3 months correlation between Sixty and JPX is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sixty Six Oilfield and JPX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPX Global and Sixty Six 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 Sixty Six Oilfield are associated (or correlated) with JPX Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPX Global has no effect on the direction of Sixty Six i.e., Sixty Six and JPX Global go up and down completely randomly.

Pair Corralation between Sixty Six and JPX Global

Given the investment horizon of 90 days Sixty Six is expected to generate 2.56 times less return on investment than JPX Global. But when comparing it to its historical volatility, Sixty Six Oilfield is 1.79 times less risky than JPX Global. It trades about 0.07 of its potential returns per unit of risk. JPX Global is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.09  in JPX Global on September 4, 2024 and sell it today you would lose (0.08) from holding JPX Global or give up 88.89% of portfolio value over 90 days.

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

Sixty Six Oilfield  vs.  JPX Global

Sixty Six Oilfield

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sixty Six Oilfield are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sixty Six reported solid returns over the last few months and may actually be approaching a breakup point.

JPX Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPX Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, JPX Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sixty Six and JPX Global

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

The idea behind Sixty Six Oilfield and JPX Global 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.