Correlation Between Purple Innovation and JS Global

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

By analyzing existing cross correlation between Purple Innovation and JS Global Lifestyle, you can compare the effects of market volatilities on Purple Innovation and JS Global 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 Purple Innovation with a short position of JS Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purple Innovation and JS Global.

Diversification Opportunities for Purple Innovation and JS Global

-0.52

Correlation Coefficient

Purple Innovation  JS Global

Excellent diversification

The 3 months correlation between Purple and JGLCF is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Purple Innovation and JS Global Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Global Lifestyle and Purple Innovation 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 Purple Innovation are associated (or correlated) with JS Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Global Lifestyle has no effect on the direction of Purple Innovation i.e., Purple Innovation and JS Global go up and down completely randomly.

Pair Corralation between Purple Innovation and JS Global

Given the investment horizon of 90 days Purple Innovation is expected to generate 0.49 times more return on investment than JS Global. However, Purple Innovation is 2.04 times less risky than JS Global. It trades about 0.24 of its potential returns per unit of risk. JS Global Lifestyle is currently generating about 0.03 per unit of risk. If you would invest  89.00  in Purple Innovation on September 12, 2024 and sell it today you would earn a total of  14.00  from holding Purple Innovation or generate 15.73% return on investment over 90 days.

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

Purple Innovation  vs.  JS Global Lifestyle

Purple Innovation

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Purple Innovation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Purple Innovation is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

JS Global Lifestyle

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JS Global Lifestyle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, JS Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Purple Innovation and JS Global

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

The idea behind Purple Innovation and JS Global Lifestyle 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.