Correlation Between Jack In and Nephros

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

By analyzing existing cross correlation between Jack In The and Nephros, you can compare the effects of market volatilities on Jack In and Nephros 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 Jack In with a short position of Nephros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack In and Nephros.

Diversification Opportunities for Jack In and Nephros

0.8

Correlation Coefficient

Jack In  Nephros

Very poor diversification

The 3 months correlation between Jack and Nephros is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Nephros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nephros and Jack In 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 Jack In The are associated (or correlated) with Nephros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nephros has no effect on the direction of Jack In i.e., Jack In and Nephros go up and down completely randomly.

Pair Corralation between Jack In and Nephros

Given the investment horizon of 90 days Jack In The is expected to under-perform the Nephros. But the stock apears to be less risky and, when comparing its historical volatility, Jack In The is 2.77 times less risky than Nephros. The stock trades about -0.09 of its potential returns per unit of risk. The Nephros is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  122.00  in Nephros on January 19, 2024 and sell it today you would earn a total of  81.00  from holding Nephros or generate 66.39% return on investment over 90 days.

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

Jack In The  vs.  Nephros

Jack In

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nephros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nephros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Jack In and Nephros

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

The idea behind Jack In The and Nephros 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.