Correlation Between JRW Utility and Sabuy Technology

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

By analyzing existing cross correlation between JRW Utility Public and Sabuy Technology Public, you can compare the effects of market volatilities on JRW Utility and Sabuy Technology 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 JRW Utility with a short position of Sabuy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of JRW Utility and Sabuy Technology.

Diversification Opportunities for JRW Utility and Sabuy Technology

0.82

Correlation Coefficient

JRW Utility  Sabuy Technology

Very poor diversification

The 3 months correlation between JRW and Sabuy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JRW Utility Public and Sabuy Technology Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabuy Technology Public and JRW Utility 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 JRW Utility Public are associated (or correlated) with Sabuy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabuy Technology Public has no effect on the direction of JRW Utility i.e., JRW Utility and Sabuy Technology go up and down completely randomly.

Pair Corralation between JRW Utility and Sabuy Technology

Assuming the 90 days horizon JRW Utility Public is expected to generate 0.35 times more return on investment than Sabuy Technology. However, JRW Utility Public is 2.85 times less risky than Sabuy Technology. It trades about -0.32 of its potential returns per unit of risk. Sabuy Technology Public is currently generating about -0.23 per unit of risk. If you would invest  350.00  in JRW Utility Public on September 17, 2024 and sell it today you would lose (100.00) from holding JRW Utility Public or give up 28.57% of portfolio value over 90 days.

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

JRW Utility Public  vs.  Sabuy Technology Public

JRW Utility Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JRW Utility Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sabuy Technology Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabuy Technology Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JRW Utility and Sabuy Technology

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

The idea behind JRW Utility Public and Sabuy Technology Public 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.