Correlation Between Trisul SA and JHSF Participaes

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

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

Diversification Opportunities for Trisul SA and JHSF Participaes

0.85

Correlation Coefficient

Trisul SA  JHSF Participaes

Very poor diversification

The 3 months correlation between Trisul and JHSF is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Trisul SA and JHSF Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JHSF Participaes and Trisul SA 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 Trisul SA are associated (or correlated) with JHSF Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JHSF Participaes has no effect on the direction of Trisul SA i.e., Trisul SA and JHSF Participaes go up and down completely randomly.

Pair Corralation between Trisul SA and JHSF Participaes

Assuming the 90 days trading horizon Trisul SA is expected to under-perform the JHSF Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Trisul SA is 1.2 times less risky than JHSF Participaes. The stock trades about -0.51 of its potential returns per unit of risk. The JHSF Participaes SA is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest  446.00  in JHSF Participaes SA on September 24, 2024 and sell it today you would lose (68.00) from holding JHSF Participaes SA or give up 15.25% of portfolio value over 90 days.

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

Trisul SA  vs.  JHSF Participaes SA

Trisul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trisul SA 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.

JHSF Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JHSF Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JHSF Participaes 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 Trisul SA and JHSF Participaes

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

The idea behind Trisul SA and JHSF Participaes 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.