Correlation Between Tempo Automation and Jabil Circuit

Can any of the company-specific risk be diversified away by investing in both Tempo Automation and Jabil Circuit 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 Tempo Automation and Jabil Circuit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tempo Automation Holdings and Jabil Circuit, you can compare the effects of market volatilities on Tempo Automation and Jabil Circuit 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 Tempo Automation with a short position of Jabil Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempo Automation and Jabil Circuit.

Diversification Opportunities for Tempo Automation and Jabil Circuit

-0.45

Correlation Coefficient

Tempo Automation  Jabil Circuit

Very good diversification

The 3 months correlation between Tempo and Jabil is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tempo Automation Holdings and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Tempo Automation 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 Tempo Automation Holdings are associated (or correlated) with Jabil Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jabil Circuit has no effect on the direction of Tempo Automation i.e., Tempo Automation and Jabil Circuit go up and down completely randomly.

Pair Corralation between Tempo Automation and Jabil Circuit

Given the investment horizon of 90 days Tempo Automation Holdings is expected to under-perform the Jabil Circuit. In addition to that, Tempo Automation is 4.89 times more volatile than Jabil Circuit. It trades about 0.0 of its total potential returns per unit of risk. Jabil Circuit is currently generating about 0.08 per unit of volatility. If you would invest  6,678  in Jabil Circuit on September 21, 2024 and sell it today you would earn a total of  7,366  from holding Jabil Circuit or generate 110.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.08%
Values	Daily Returns

Tempo Automation Holdings  vs.  Jabil Circuit

Tempo Automation Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempo Automation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tempo Automation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Jabil Circuit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Jabil Circuit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tempo Automation and Jabil Circuit

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

The idea behind Tempo Automation Holdings and Jabil Circuit 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.