Correlation Between Jacobs Solutions and Wang Lee

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

By analyzing existing cross correlation between Jacobs Solutions and Wang Lee Group,, you can compare the effects of market volatilities on Jacobs Solutions and Wang Lee 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 Wang Lee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Wang Lee.

Diversification Opportunities for Jacobs Solutions and Wang Lee

0.75

Correlation Coefficient

Jacobs Solutions  Wang Lee

Poor diversification

The 3 months correlation between Jacobs and Wang is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Wang Lee Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wang Lee Group, 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 Wang Lee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wang Lee Group, has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Wang Lee go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Wang Lee

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 17.65 times less return on investment than Wang Lee. But when comparing it to its historical volatility, Jacobs Solutions is 8.06 times less risky than Wang Lee. It trades about 0.15 of its potential returns per unit of risk. Wang Lee Group, is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Wang Lee Group, on September 2, 2024 and sell it today you would earn a total of  417.00  from holding Wang Lee Group, or generate 744.64% return on investment over 90 days.

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

Jacobs Solutions  vs.  Wang Lee Group,

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.

Wang Lee Group,

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Wang Lee

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

The idea behind Jacobs Solutions and Wang Lee Group, 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.