Correlation Between Post Holdings and JBS SA

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Can any of the company-specific risk be diversified away by investing in both Post Holdings and JBS SA 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 Post Holdings and JBS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post Holdings and JBS SA, you can compare the effects of market volatilities on Post Holdings and JBS SA 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 Post Holdings with a short position of JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post Holdings and JBS SA.

Diversification Opportunities for Post Holdings and JBS SA

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Post and JBS is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Post Holdings and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and Post Holdings 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 Post Holdings are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Post Holdings i.e., Post Holdings and JBS SA go up and down completely randomly.

Pair Corralation between Post Holdings and JBS SA

Given the investment horizon of 90 days Post Holdings is expected to generate 2.29 times less return on investment than JBS SA. But when comparing it to its historical volatility, Post Holdings is 1.97 times less risky than JBS SA. It trades about 0.05 of its potential returns per unit of risk. JBS SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,191  in JBS SA on September 13, 2024 and sell it today you would earn a total of  74.00  from holding JBS SA or generate 6.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Post Holdings  vs.  JBS SA

 Performance 
       Timeline  
Post Holdings 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Post Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Post Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JBS SA 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, JBS SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Post Holdings and JBS SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Post Holdings and JBS SA

The main advantage of trading using opposite Post Holdings and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post Holdings position performs unexpectedly, JBS SA 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 JBS SA will offset losses from the drop in JBS SA's long position.
The idea behind Post Holdings and JBS SA 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.
Check out your portfolio center.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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