Correlation Between JB Hi and Manhattan Corp

Can any of the company-specific risk be diversified away by investing in both JB Hi and Manhattan Corp 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 Hi and Manhattan Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JB Hi Fi and Manhattan Corp, you can compare the effects of market volatilities on JB Hi and Manhattan Corp 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 Hi with a short position of Manhattan Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hi and Manhattan Corp.

Diversification Opportunities for JB Hi and Manhattan Corp

-0.5

Correlation Coefficient

JB Hi  Manhattan Corp

Very good diversification

The 3 months correlation between JBH and Manhattan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JB Hi Fi and Manhattan Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Corp and JB Hi 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 Hi Fi are associated (or correlated) with Manhattan Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Corp has no effect on the direction of JB Hi i.e., JB Hi and Manhattan Corp go up and down completely randomly.

Pair Corralation between JB Hi and Manhattan Corp

Assuming the 90 days trading horizon JB Hi is expected to generate 4.34 times less return on investment than Manhattan Corp. But when comparing it to its historical volatility, JB Hi Fi is 16.14 times less risky than Manhattan Corp. It trades about 0.28 of its potential returns per unit of risk. Manhattan Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Manhattan Corp on September 26, 2024 and sell it today you would lose (0.90) from holding Manhattan Corp or give up 30.0% of portfolio value over 90 days.

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

JB Hi Fi  vs.  Manhattan Corp

JB Hi Fi

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hi Fi are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, JB Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Manhattan Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manhattan Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Manhattan Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JB Hi and Manhattan Corp

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

The idea behind JB Hi Fi and Manhattan Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.