Correlation Between JS Global and KSB Pumps

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

By analyzing existing cross correlation between JS Global Banking and KSB Pumps, you can compare the effects of market volatilities on JS Global and KSB Pumps 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 KSB Pumps. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Global and KSB Pumps.

Diversification Opportunities for JS Global and KSB Pumps

0.49

Correlation Coefficient

JS Global  KSB Pumps

Very weak diversification

The 3 months correlation between JSGBETF and KSB is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding JS Global Banking and KSB Pumps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB Pumps 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 Banking are associated (or correlated) with KSB Pumps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB Pumps has no effect on the direction of JS Global i.e., JS Global and KSB Pumps go up and down completely randomly.

Pair Corralation between JS Global and KSB Pumps

Assuming the 90 days trading horizon JS Global Banking is expected to generate 1.07 times more return on investment than KSB Pumps. However, JS Global is 1.07 times more volatile than KSB Pumps. It trades about 0.15 of its potential returns per unit of risk. KSB Pumps is currently generating about 0.05 per unit of risk. If you would invest  1,633  in JS Global Banking on September 15, 2024 and sell it today you would earn a total of  464.00  from holding JS Global Banking or generate 28.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

JS Global Banking  vs.  KSB Pumps

JS Global Banking

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JS Global Banking are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, JS Global reported solid returns over the last few months and may actually be approaching a breakup point.

KSB Pumps

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with JS Global and KSB Pumps

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

The idea behind JS Global Banking and KSB Pumps 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.