Correlation Between J J and Danone PK

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

By analyzing existing cross correlation between J J Snack and Danone PK, you can compare the effects of market volatilities on J J and Danone PK 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 J J with a short position of Danone PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and Danone PK.

Diversification Opportunities for J J and Danone PK

-0.07

Correlation Coefficient

J J  Danone PK

Good diversification

The 3 months correlation between JJSF and Danone is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Danone PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone PK and J J 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 J J Snack are associated (or correlated) with Danone PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone PK has no effect on the direction of J J i.e., J J and Danone PK go up and down completely randomly.

Pair Corralation between J J and Danone PK

If you would invest  1,267  in Danone PK on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Danone PK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

J J Snack  vs.  Danone PK

J J Snack

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J J Snack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, J J is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Danone PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danone PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Danone PK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with J J and Danone PK

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

The idea behind J J Snack and Danone PK 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.