Correlation Between JF Technology and MyTech Group
Can any of the company-specific risk be diversified away by investing in both JF Technology and MyTech Group 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 MyTech Group 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 MyTech Group Bhd, you can compare the effects of market volatilities on JF Technology and MyTech Group 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 MyTech Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JF Technology and MyTech Group.
Diversification Opportunities for JF Technology and MyTech Group
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0146 and MyTech is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding JF Technology BHD and MyTech Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MyTech Group Bhd 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 MyTech Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MyTech Group Bhd has no effect on the direction of JF Technology i.e., JF Technology and MyTech Group go up and down completely randomly.
Pair Corralation between JF Technology and MyTech Group
Assuming the 90 days trading horizon JF Technology BHD is expected to under-perform the MyTech Group. In addition to that, JF Technology is 2.01 times more volatile than MyTech Group Bhd. It trades about -0.21 of its total potential returns per unit of risk. MyTech Group Bhd is currently generating about -0.32 per unit of volatility. If you would invest 46.00 in MyTech Group Bhd on August 28, 2024 and sell it today you would lose (4.00) from holding MyTech Group Bhd or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JF Technology BHD vs. MyTech Group Bhd
Performance |
| Timeline |
| JF Technology BHD |
| MyTech Group Bhd |
JF Technology and MyTech Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JF Technology and MyTech Group
The main advantage of trading using opposite JF Technology and MyTech Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JF Technology position performs unexpectedly, MyTech Group 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 MyTech Group will offset losses from the drop in MyTech Group's long position.The idea behind JF Technology BHD and MyTech Group Bhd 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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