Correlation Between Jack Nathan and American Shared

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

By analyzing existing cross correlation between Jack Nathan Medical and American Shared Hospital, you can compare the effects of market volatilities on Jack Nathan and American Shared 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 Jack Nathan with a short position of American Shared. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack Nathan and American Shared.

Diversification Opportunities for Jack Nathan and American Shared

-0.2

Correlation Coefficient

Jack Nathan  American Shared

Good diversification

The 3 months correlation between Jack and American is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Jack Nathan Medical and American Shared Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shared Hospital and Jack Nathan 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 Jack Nathan Medical are associated (or correlated) with American Shared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shared Hospital has no effect on the direction of Jack Nathan i.e., Jack Nathan and American Shared go up and down completely randomly.

Pair Corralation between Jack Nathan and American Shared

Assuming the 90 days horizon Jack Nathan Medical is expected to generate 5.64 times more return on investment than American Shared. However, Jack Nathan is 5.64 times more volatile than American Shared Hospital. It trades about 0.09 of its potential returns per unit of risk. American Shared Hospital is currently generating about 0.06 per unit of risk. If you would invest  1.70  in Jack Nathan Medical on September 23, 2024 and sell it today you would earn a total of  0.60  from holding Jack Nathan Medical or generate 35.29% return on investment over 90 days.

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

Jack Nathan Medical  vs.  American Shared Hospital

Jack Nathan Medical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Nathan Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Jack Nathan reported solid returns over the last few months and may actually be approaching a breakup point.

American Shared Hospital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Shared Hospital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, American Shared may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jack Nathan and American Shared

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

The idea behind Jack Nathan Medical and American Shared Hospital 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.