Correlation Between Freeport and Jerash Holdings

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

By analyzing existing cross correlation between Freeport McMoRan 54 percent and Jerash Holdings, you can compare the effects of market volatilities on Freeport and Jerash Holdings 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 Freeport with a short position of Jerash Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport and Jerash Holdings.

Diversification Opportunities for Freeport and Jerash Holdings

0.39

Correlation Coefficient

Freeport  Jerash Holdings

Weak diversification

The 3 months correlation between Freeport and Jerash is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 54 percent and Jerash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerash Holdings and Freeport 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 Freeport McMoRan 54 percent are associated (or correlated) with Jerash Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerash Holdings has no effect on the direction of Freeport i.e., Freeport and Jerash Holdings go up and down completely randomly.

Pair Corralation between Freeport and Jerash Holdings

Assuming the 90 days trading horizon Freeport is expected to generate 1.95 times less return on investment than Jerash Holdings. But when comparing it to its historical volatility, Freeport McMoRan 54 percent is 2.4 times less risky than Jerash Holdings. It trades about 0.09 of its potential returns per unit of risk. Jerash Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  333.00  in Jerash Holdings on December 25, 2024 and sell it today you would earn a total of  21.00  from holding Jerash Holdings or generate 6.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Freeport McMoRan 54 percent  vs.  Jerash Holdings

Freeport McMoRan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freeport McMoRan 54 percent are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jerash Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Jerash Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Freeport and Jerash Holdings

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

The idea behind Freeport McMoRan 54 percent and Jerash Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.