Correlation Between Miton UK and JZ Capital

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

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

Diversification Opportunities for Miton UK and JZ Capital

-0.48

Correlation Coefficient

Miton UK  JZ Capital

Very good diversification

The 3 months correlation between Miton and JZCP is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Miton UK MicroCap and JZ Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JZ Capital Partners and Miton UK 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 Miton UK MicroCap are associated (or correlated) with JZ Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JZ Capital Partners has no effect on the direction of Miton UK i.e., Miton UK and JZ Capital go up and down completely randomly.

Pair Corralation between Miton UK and JZ Capital

Assuming the 90 days trading horizon Miton UK MicroCap is expected to under-perform the JZ Capital. But the stock apears to be less risky and, when comparing its historical volatility, Miton UK MicroCap is 1.26 times less risky than JZ Capital. The stock trades about -0.11 of its potential returns per unit of risk. The JZ Capital Partners is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  21,500  in JZ Capital Partners on September 3, 2024 and sell it today you would lose (1,500) from holding JZ Capital Partners or give up 6.98% of portfolio value over 90 days.

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

Miton UK MicroCap  vs.  JZ Capital Partners

Miton UK MicroCap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Miton UK MicroCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JZ Capital Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JZ Capital Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JZ Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Miton UK and JZ Capital

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

The idea behind Miton UK MicroCap and JZ Capital Partners 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.