Correlation Between Hooker Furniture and JBDI Holdings

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

By analyzing existing cross correlation between Hooker Furniture and JBDI Holdings Limited, you can compare the effects of market volatilities on Hooker Furniture and JBDI 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 Hooker Furniture with a short position of JBDI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and JBDI Holdings.

Diversification Opportunities for Hooker Furniture and JBDI Holdings

-0.23

Correlation Coefficient

Hooker Furniture  JBDI Holdings

Very good diversification

The 3 months correlation between Hooker and JBDI is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and JBDI Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBDI Holdings Limited and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with JBDI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBDI Holdings Limited has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and JBDI Holdings go up and down completely randomly.

Pair Corralation between Hooker Furniture and JBDI Holdings

Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the JBDI Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Hooker Furniture is 1.26 times less risky than JBDI Holdings. The stock trades about -0.19 of its potential returns per unit of risk. The JBDI Holdings Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  63.00  in JBDI Holdings Limited on September 21, 2024 and sell it today you would lose (5.00) from holding JBDI Holdings Limited or give up 7.94% of portfolio value over 90 days.

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

Hooker Furniture  vs.  JBDI Holdings Limited

Hooker Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JBDI Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBDI Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Hooker Furniture and JBDI Holdings

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

The idea behind Hooker Furniture and JBDI Holdings Limited 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.