Correlation Between Jb Financial and E Mart

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

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

Diversification Opportunities for Jb Financial and E Mart

0.38

Correlation Coefficient

Jb Financial  E Mart

Weak diversification

The 3 months correlation between 175330 and 139480 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Jb Financial and E Mart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Mart and Jb Financial 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 Jb Financial are associated (or correlated) with E Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Mart has no effect on the direction of Jb Financial i.e., Jb Financial and E Mart go up and down completely randomly.

Pair Corralation between Jb Financial and E Mart

Assuming the 90 days trading horizon Jb Financial is expected to under-perform the E Mart. But the stock apears to be less risky and, when comparing its historical volatility, Jb Financial is 1.11 times less risky than E Mart. The stock trades about -0.15 of its potential returns per unit of risk. The E Mart is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,420,000  in E Mart on September 27, 2024 and sell it today you would earn a total of  740,000  from holding E Mart or generate 11.53% return on investment over 90 days.

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

Jb Financial  vs.  E Mart

Jb Financial

Risk-Adjusted Performance

5 of 100

Modest

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

E Mart

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E Mart are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, E Mart sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jb Financial and E Mart

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

The idea behind Jb Financial and E Mart 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.