Correlation Between Trk Corp and Jentech Precision
Can any of the company-specific risk be diversified away by investing in both Trk Corp and Jentech Precision 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 Trk Corp and Jentech Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trk Corp and Jentech Precision Industrial, you can compare the effects of market volatilities on Trk Corp and Jentech Precision 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 Trk Corp with a short position of Jentech Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trk Corp and Jentech Precision.
Diversification Opportunities for Trk Corp and Jentech Precision
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trk and Jentech is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Trk Corp and Jentech Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jentech Precision and Trk Corp 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 Trk Corp are associated (or correlated) with Jentech Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jentech Precision has no effect on the direction of Trk Corp i.e., Trk Corp and Jentech Precision go up and down completely randomly.
Pair Corralation between Trk Corp and Jentech Precision
Assuming the 90 days trading horizon Trk Corp is expected to generate 6.09 times less return on investment than Jentech Precision. But when comparing it to its historical volatility, Trk Corp is 1.76 times less risky than Jentech Precision. It trades about 0.03 of its potential returns per unit of risk. Jentech Precision Industrial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 64,000 in Jentech Precision Industrial on September 2, 2024 and sell it today you would earn a total of 74,500 from holding Jentech Precision Industrial or generate 116.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trk Corp vs. Jentech Precision Industrial
Performance |
| Timeline |
| Trk Corp |
| Jentech Precision |
Trk Corp and Jentech Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trk Corp and Jentech Precision
The main advantage of trading using opposite Trk Corp and Jentech Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trk Corp position performs unexpectedly, Jentech Precision 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 Jentech Precision will offset losses from the drop in Jentech Precision's long position.| Trk Corp vs. Formosa Taffeta Co | Trk Corp vs. Tainan Spinning Co | Trk Corp vs. Carnival Industrial Corp | Trk Corp vs. Lily Textile Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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