Correlation Between Cactus and Jutal Offshore

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

By analyzing existing cross correlation between Cactus Inc and Jutal Offshore Oil, you can compare the effects of market volatilities on Cactus and Jutal Offshore 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 Cactus with a short position of Jutal Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Jutal Offshore.

Diversification Opportunities for Cactus and Jutal Offshore

0.58

Correlation Coefficient

Cactus  Jutal Offshore

Very weak diversification

The 3 months correlation between Cactus and Jutal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Jutal Offshore Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jutal Offshore Oil and Cactus 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 Cactus Inc are associated (or correlated) with Jutal Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jutal Offshore Oil has no effect on the direction of Cactus i.e., Cactus and Jutal Offshore go up and down completely randomly.

Pair Corralation between Cactus and Jutal Offshore

Considering the 90-day investment horizon Cactus is expected to generate 1.14 times less return on investment than Jutal Offshore. In addition to that, Cactus is 1.09 times more volatile than Jutal Offshore Oil. It trades about 0.11 of its total potential returns per unit of risk. Jutal Offshore Oil is currently generating about 0.14 per unit of volatility. If you would invest  1,560  in Jutal Offshore Oil on September 4, 2024 and sell it today you would earn a total of  350.00  from holding Jutal Offshore Oil or generate 22.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Cactus Inc  vs.  Jutal Offshore Oil

Cactus Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cactus Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Cactus exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jutal Offshore Oil

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jutal Offshore Oil are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Jutal Offshore showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cactus and Jutal Offshore

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

The idea behind Cactus Inc and Jutal Offshore Oil 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.