Correlation Between Brite Tech and JF Technology
Can any of the company-specific risk be diversified away by investing in both Brite Tech and JF Technology 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 Brite Tech and JF Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brite Tech Bhd and JF Technology BHD, you can compare the effects of market volatilities on Brite Tech and JF Technology 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 Brite Tech with a short position of JF Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brite Tech and JF Technology.
Diversification Opportunities for Brite Tech and JF Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brite and 0146 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brite Tech Bhd and JF Technology BHD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JF Technology BHD and Brite Tech 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 Brite Tech Bhd are associated (or correlated) with JF Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JF Technology BHD has no effect on the direction of Brite Tech i.e., Brite Tech and JF Technology go up and down completely randomly.
Pair Corralation between Brite Tech and JF Technology
Assuming the 90 days trading horizon Brite Tech Bhd is expected to generate 1.36 times more return on investment than JF Technology. However, Brite Tech is 1.36 times more volatile than JF Technology BHD. It trades about 0.03 of its potential returns per unit of risk. JF Technology BHD is currently generating about -0.08 per unit of risk. If you would invest 27.00 in Brite Tech Bhd on August 27, 2024 and sell it today you would earn a total of 4.00 from holding Brite Tech Bhd or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brite Tech Bhd vs. JF Technology BHD
Performance |
| Timeline |
| Brite Tech Bhd |
| JF Technology BHD |
Brite Tech and JF Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brite Tech and JF Technology
The main advantage of trading using opposite Brite Tech and JF Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brite Tech position performs unexpectedly, JF Technology 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 JF Technology will offset losses from the drop in JF Technology's long position.| Brite Tech vs. Choo Bee Metal | Brite Tech vs. KPJ Healthcare Bhd | Brite Tech vs. Computer Forms Bhd | Brite Tech vs. Cosmos Technology International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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