Correlation Between Europac Gold and Jambo

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

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

Diversification Opportunities for Europac Gold and Jambo

-0.32

Correlation Coefficient

Europac Gold  Jambo

Very good diversification

The 3 months correlation between Europac and Jambo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Jambo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jambo and Europac Gold 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 Europac Gold Fund are associated (or correlated) with Jambo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jambo has no effect on the direction of Europac Gold i.e., Europac Gold and Jambo go up and down completely randomly.

Pair Corralation between Europac Gold and Jambo

Assuming the 90 days horizon Europac Gold is expected to generate 2.66 times less return on investment than Jambo. But when comparing it to its historical volatility, Europac Gold Fund is 6.82 times less risky than Jambo. It trades about 0.13 of its potential returns per unit of risk. Jambo is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Jambo on February 3, 2025 and sell it today you would lose (1.00) from holding Jambo or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Europac Gold Fund  vs.  Jambo

Europac Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Europac Gold Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europac Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Jambo

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jambo are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Jambo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Europac Gold and Jambo

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

The idea behind Europac Gold Fund and Jambo 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.