Correlation Between Major Drilling and JBS SA

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

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

Diversification Opportunities for Major Drilling and JBS SA

0.83

Correlation Coefficient

Major Drilling  JBS SA

Very poor diversification

The 3 months correlation between Major and JBS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and Major Drilling 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 Major Drilling Group are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Major Drilling i.e., Major Drilling and JBS SA go up and down completely randomly.

Pair Corralation between Major Drilling and JBS SA

Assuming the 90 days horizon Major Drilling is expected to generate 12.33 times less return on investment than JBS SA. But when comparing it to its historical volatility, Major Drilling Group is 4.79 times less risky than JBS SA. It trades about 0.04 of its potential returns per unit of risk. JBS SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,119  in JBS SA on May 5, 2025 and sell it today you would earn a total of  3,570  from holding JBS SA or generate 86.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.92%
Values	Daily Returns

Major Drilling Group  vs.  JBS SA

Major Drilling Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Major Drilling Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Major Drilling may actually be approaching a critical reversion point that can send shares even higher in September 2025.

JBS SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JBS SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Major Drilling and JBS SA

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

The idea behind Major Drilling Group and JBS SA 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.