Correlation Between Malibu Boats and Jerash Holdings

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

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

Diversification Opportunities for Malibu Boats and Jerash Holdings

0.28

Correlation Coefficient

Malibu Boats  Jerash Holdings

Modest diversification

The 3 months correlation between Malibu and Jerash is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Jerash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerash Holdings and Malibu Boats 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 Malibu Boats are associated (or correlated) with Jerash Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerash Holdings has no effect on the direction of Malibu Boats i.e., Malibu Boats and Jerash Holdings go up and down completely randomly.

Pair Corralation between Malibu Boats and Jerash Holdings

Given the investment horizon of 90 days Malibu Boats is expected to under-perform the Jerash Holdings. In addition to that, Malibu Boats is 2.06 times more volatile than Jerash Holdings. It trades about -0.42 of its total potential returns per unit of risk. Jerash Holdings is currently generating about -0.02 per unit of volatility. If you would invest  306.00  in Jerash Holdings on January 28, 2024 and sell it today you would lose (2.00) from holding Jerash Holdings or give up 0.65% of portfolio value over 90 days.

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

Malibu Boats  vs.  Jerash Holdings

Malibu Boats

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malibu Boats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Jerash Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Jerash Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Malibu Boats and Jerash Holdings

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

The idea behind Malibu Boats and Jerash Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.