Correlation Between Judo Capital and Australia

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

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

Diversification Opportunities for Judo Capital and Australia

0.74

Correlation Coefficient

Judo Capital  Australia

Poor diversification

The 3 months correlation between Judo and Australia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Judo Capital Holdings and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New and Judo Capital 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 Judo Capital Holdings are associated (or correlated) with Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Judo Capital i.e., Judo Capital and Australia go up and down completely randomly.

Pair Corralation between Judo Capital and Australia

Assuming the 90 days trading horizon Judo Capital Holdings is expected to generate 0.95 times more return on investment than Australia. However, Judo Capital Holdings is 1.05 times less risky than Australia. It trades about -0.26 of its potential returns per unit of risk. Australia and New is currently generating about -0.3 per unit of risk. If you would invest  198.00  in Judo Capital Holdings on October 1, 2024 and sell it today you would lose (13.00) from holding Judo Capital Holdings or give up 6.57% of portfolio value over 90 days.

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

Judo Capital Holdings  vs.  Australia and New

Judo Capital Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Judo Capital Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Judo Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Australia and New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australia and New has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Australia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Judo Capital and Australia

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

The idea behind Judo Capital Holdings and Australia and New 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..