Correlation Between JF Technology and Senheng New
Can any of the company-specific risk be diversified away by investing in both JF Technology and Senheng New 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 JF Technology and Senheng New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JF Technology BHD and Senheng New Retail, you can compare the effects of market volatilities on JF Technology and Senheng New 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 JF Technology with a short position of Senheng New. Check out your portfolio center. Please also check ongoing floating volatility patterns of JF Technology and Senheng New.
Diversification Opportunities for JF Technology and Senheng New
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 0146 and Senheng is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding JF Technology BHD and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail and JF Technology 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 JF Technology BHD are associated (or correlated) with Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of JF Technology i.e., JF Technology and Senheng New go up and down completely randomly.
Pair Corralation between JF Technology and Senheng New
Assuming the 90 days trading horizon JF Technology BHD is expected to under-perform the Senheng New. In addition to that, JF Technology is 1.72 times more volatile than Senheng New Retail. It trades about -0.2 of its total potential returns per unit of risk. Senheng New Retail is currently generating about -0.12 per unit of volatility. If you would invest 25.00 in Senheng New Retail on August 26, 2024 and sell it today you would lose (1.00) from holding Senheng New Retail or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JF Technology BHD vs. Senheng New Retail
Performance |
| Timeline |
| JF Technology BHD |
| Senheng New Retail |
JF Technology and Senheng New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JF Technology and Senheng New
The main advantage of trading using opposite JF Technology and Senheng New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JF Technology position performs unexpectedly, Senheng New 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 Senheng New will offset losses from the drop in Senheng New's long position.The idea behind JF Technology BHD and Senheng New Retail 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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