Correlation Between Jacobs Solutions and Junee Limited

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

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

Diversification Opportunities for Jacobs Solutions and Junee Limited

0.18

Correlation Coefficient

Jacobs Solutions  Junee Limited

Average diversification

The 3 months correlation between Jacobs and Junee is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Junee Limited Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Junee Limited Ordinary and Jacobs Solutions 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 Jacobs Solutions are associated (or correlated) with Junee Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Junee Limited Ordinary has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Junee Limited go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Junee Limited

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.87 times more return on investment than Junee Limited. However, Jacobs Solutions is 1.16 times less risky than Junee Limited. It trades about -0.02 of its potential returns per unit of risk. Junee Limited Ordinary is currently generating about -0.29 per unit of risk. If you would invest  13,984  in Jacobs Solutions on September 5, 2024 and sell it today you would lose (184.00) from holding Jacobs Solutions or give up 1.32% of portfolio value over 90 days.

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

Jacobs Solutions  vs.  Junee Limited Ordinary

Jacobs Solutions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions revealed solid returns over the last few months and may actually be approaching a breakup point.

Junee Limited Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Junee Limited Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Junee Limited is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Jacobs Solutions and Junee Limited

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

The idea behind Jacobs Solutions and Junee Limited Ordinary 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.