Correlation Between Jupiter and ALGO

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

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

Diversification Opportunities for Jupiter and ALGO

0.61

Correlation Coefficient

Jupiter  ALGO

Poor diversification

The 3 months correlation between Jupiter and ALGO is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Jupiter and ALGO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGO and Jupiter 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 Jupiter are associated (or correlated) with ALGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGO has no effect on the direction of Jupiter i.e., Jupiter and ALGO go up and down completely randomly.

Pair Corralation between Jupiter and ALGO

Assuming the 90 days trading horizon Jupiter is expected to generate 0.97 times more return on investment than ALGO. However, Jupiter is 1.03 times less risky than ALGO. It trades about 0.08 of its potential returns per unit of risk. ALGO is currently generating about 0.07 per unit of risk. If you would invest  48.00  in Jupiter on April 25, 2025 and sell it today you would earn a total of  10.00  from holding Jupiter or generate 20.83% return on investment over 90 days.

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

Jupiter  vs.  ALGO

Jupiter

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Jupiter exhibited solid returns over the last few months and may actually be approaching a breakup point.

ALGO

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALGO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ALGO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jupiter and ALGO

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

The idea behind Jupiter and ALGO 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.