Correlation Between Transport International and JAMES HARDIE

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

By analyzing existing cross correlation between Transport International Holdings and JAMES HARDIE INDUSTADR1, you can compare the effects of market volatilities on Transport International and JAMES HARDIE 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 Transport International with a short position of JAMES HARDIE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and JAMES HARDIE.

Diversification Opportunities for Transport International and JAMES HARDIE

0.12

Correlation Coefficient

Transport International  JAMES HARDIE

Average diversification

The 3 months correlation between Transport and JAMES is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and JAMES HARDIE INDUSTADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAMES HARDIE INDUSTADR1 and Transport International 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 Transport International Holdings are associated (or correlated) with JAMES HARDIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAMES HARDIE INDUSTADR1 has no effect on the direction of Transport International i.e., Transport International and JAMES HARDIE go up and down completely randomly.

Pair Corralation between Transport International and JAMES HARDIE

Assuming the 90 days horizon Transport International Holdings is expected to generate 0.34 times more return on investment than JAMES HARDIE. However, Transport International Holdings is 2.92 times less risky than JAMES HARDIE. It trades about 0.04 of its potential returns per unit of risk. JAMES HARDIE INDUSTADR1 is currently generating about -0.02 per unit of risk. If you would invest  93.00  in Transport International Holdings on September 24, 2024 and sell it today you would earn a total of  3.00  from holding Transport International Holdings or generate 3.23% return on investment over 90 days.

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

Transport International Holdin  vs.  JAMES HARDIE INDUSTADR1

Transport International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transport International Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Transport International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JAMES HARDIE INDUSTADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JAMES HARDIE INDUSTADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Transport International and JAMES HARDIE

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

The idea behind Transport International Holdings and JAMES HARDIE INDUSTADR1 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.