Correlation Between AUSTEVOLL SEAFOOD and J+J SNACK

Can any of the company-specific risk be diversified away by investing in both AUSTEVOLL SEAFOOD and J+J SNACK 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 AUSTEVOLL SEAFOOD and J+J SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AUSTEVOLL SEAFOOD and JJ SNACK FOODS, you can compare the effects of market volatilities on AUSTEVOLL SEAFOOD and J+J SNACK 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 AUSTEVOLL SEAFOOD with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUSTEVOLL SEAFOOD and J+J SNACK.

Diversification Opportunities for AUSTEVOLL SEAFOOD and J+J SNACK

0.44

Correlation Coefficient

AUSTEVOLL SEAFOOD  J+J SNACK

Very weak diversification

The 3 months correlation between AUSTEVOLL and J+J is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AUSTEVOLL SEAFOOD and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD are associated (or correlated) with J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of AUSTEVOLL SEAFOOD i.e., AUSTEVOLL SEAFOOD and J+J SNACK go up and down completely randomly.

Pair Corralation between AUSTEVOLL SEAFOOD and J+J SNACK

Assuming the 90 days trading horizon AUSTEVOLL SEAFOOD is expected to under-perform the J+J SNACK. In addition to that, AUSTEVOLL SEAFOOD is 1.98 times more volatile than JJ SNACK FOODS. It trades about -0.27 of its total potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.15 per unit of volatility. If you would invest  15,724  in JJ SNACK FOODS on September 23, 2024 and sell it today you would earn a total of  276.00  from holding JJ SNACK FOODS or generate 1.76% return on investment over 90 days.

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

AUSTEVOLL SEAFOOD  vs.  JJ SNACK FOODS

AUSTEVOLL SEAFOOD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUSTEVOLL SEAFOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AUSTEVOLL SEAFOOD is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

JJ SNACK FOODS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, J+J SNACK is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AUSTEVOLL SEAFOOD and J+J SNACK

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

The idea behind AUSTEVOLL SEAFOOD and JJ SNACK FOODS 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.