Correlation Between Interlink Electronics and JJill

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

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

Diversification Opportunities for Interlink Electronics and JJill

-0.41

Correlation Coefficient

Interlink Electronics  JJill

Very good diversification

The 3 months correlation between Interlink and JJill is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Interlink Electronics and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc and Interlink Electronics 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 Interlink Electronics are associated (or correlated) with JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Interlink Electronics i.e., Interlink Electronics and JJill go up and down completely randomly.

Pair Corralation between Interlink Electronics and JJill

Given the investment horizon of 90 days Interlink Electronics is expected to generate 1.3 times more return on investment than JJill. However, Interlink Electronics is 1.3 times more volatile than JJill Inc. It trades about -0.18 of its potential returns per unit of risk. JJill Inc is currently generating about -0.35 per unit of risk. If you would invest  761.00  in Interlink Electronics on January 26, 2024 and sell it today you would lose (98.00) from holding Interlink Electronics or give up 12.88% of portfolio value over 90 days.

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

Interlink Electronics  vs.  JJill Inc

Interlink Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interlink Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic 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.

JJill Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Interlink Electronics and JJill

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

The idea behind Interlink Electronics and JJill Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.