Correlation Between JS Global and Virco Manufacturing

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

By analyzing existing cross correlation between JS Global Lifestyle and Virco Manufacturing, you can compare the effects of market volatilities on JS Global and Virco Manufacturing 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 JS Global with a short position of Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Global and Virco Manufacturing.

Diversification Opportunities for JS Global and Virco Manufacturing

0.08

Correlation Coefficient

JS Global  Virco Manufacturing

Significant diversification

The 3 months correlation between JGLCF and Virco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JS Global Lifestyle and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing and JS Global 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 JS Global Lifestyle are associated (or correlated) with Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of JS Global i.e., JS Global and Virco Manufacturing go up and down completely randomly.

Pair Corralation between JS Global and Virco Manufacturing

Assuming the 90 days horizon JS Global Lifestyle is expected to generate 0.92 times more return on investment than Virco Manufacturing. However, JS Global Lifestyle is 1.09 times less risky than Virco Manufacturing. It trades about 0.04 of its potential returns per unit of risk. Virco Manufacturing is currently generating about -0.09 per unit of risk. If you would invest  16.00  in JS Global Lifestyle on September 13, 2024 and sell it today you would earn a total of  1.00  from holding JS Global Lifestyle or generate 6.25% return on investment over 90 days.

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

JS Global Lifestyle  vs.  Virco Manufacturing

JS Global Lifestyle

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JS Global Lifestyle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, JS Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Virco Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virco Manufacturing 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with JS Global and Virco Manufacturing

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

The idea behind JS Global Lifestyle and Virco Manufacturing 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.