Correlation Between Tlou Energy and JB Hi

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

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

Diversification Opportunities for Tlou Energy and JB Hi

-0.47

Correlation Coefficient

Tlou Energy  JB Hi

Very good diversification

The 3 months correlation between Tlou and JBH is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tlou Energy 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 Tlou Energy 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 Tlou Energy 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 Tlou Energy i.e., Tlou Energy and JB Hi go up and down completely randomly.

Pair Corralation between Tlou Energy and JB Hi

Assuming the 90 days trading horizon Tlou Energy is expected to under-perform the JB Hi. In addition to that, Tlou Energy is 3.02 times more volatile than JB Hi Fi. It trades about -0.04 of its total potential returns per unit of risk. JB Hi Fi is currently generating about 0.03 per unit of volatility. If you would invest  8,957  in JB Hi Fi on December 2, 2024 and sell it today you would earn a total of  248.00  from holding JB Hi Fi or generate 2.77% return on investment over 90 days.

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

Tlou Energy  vs.  JB Hi Fi

Tlou Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tlou Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JB Hi Fi

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hi Fi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, JB Hi 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 Tlou Energy and JB Hi

The main advantage of trading using opposite Tlou Energy and JB Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tlou Energy 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 Tlou Energy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.