Correlation Between Vinci S and J+J SNACK

Can any of the company-specific risk be diversified away by investing in both Vinci S and J+J SNACK 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 Vinci S and J+J SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vinci S A and JJ SNACK FOODS, you can compare the effects of market volatilities on Vinci S and J+J SNACK 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 Vinci S with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci S and J+J SNACK.

Diversification Opportunities for Vinci S and J+J SNACK

-0.82

Correlation Coefficient

Vinci S  J+J SNACK

Pay attention - limited upside

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

Pair Corralation between Vinci S and J+J SNACK

Assuming the 90 days horizon Vinci S A is expected to under-perform the J+J SNACK. In addition to that, Vinci S is 1.87 times more volatile than JJ SNACK FOODS. It trades about -0.05 of its total potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.18 per unit of volatility. If you would invest  14,624  in JJ SNACK FOODS on September 12, 2024 and sell it today you would earn a total of  1,576  from holding JJ SNACK FOODS or generate 10.78% return on investment over 90 days.

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

Vinci S A  vs.  JJ SNACK FOODS

Vinci S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vinci S is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JJ SNACK FOODS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vinci S and J+J SNACK

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

The idea behind Vinci S A and JJ SNACK FOODS 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.