Correlation Between JPM INDIAN and CEOTRONICS
Can any of the company-specific risk be diversified away by investing in both JPM INDIAN and CEOTRONICS 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 JPM INDIAN and CEOTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPM INDIAN INVT and CEOTRONICS, you can compare the effects of market volatilities on JPM INDIAN and CEOTRONICS 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 JPM INDIAN with a short position of CEOTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM INDIAN and CEOTRONICS.
Diversification Opportunities for JPM INDIAN and CEOTRONICS
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JPM and CEOTRONICS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding JPM INDIAN INVT and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS and JPM INDIAN 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 JPM INDIAN INVT are associated (or correlated) with CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of JPM INDIAN i.e., JPM INDIAN and CEOTRONICS go up and down completely randomly.
Pair Corralation between JPM INDIAN and CEOTRONICS
Assuming the 90 days horizon JPM INDIAN is expected to generate 1.44 times less return on investment than CEOTRONICS. But when comparing it to its historical volatility, JPM INDIAN INVT is 2.17 times less risky than CEOTRONICS. It trades about 0.06 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 445.00 in CEOTRONICS on September 3, 2024 and sell it today you would earn a total of 175.00 from holding CEOTRONICS or generate 39.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.25% |
| Values | Daily Returns |
JPM INDIAN INVT vs. CEOTRONICS
Performance |
| Timeline |
| JPM INDIAN INVT |
| CEOTRONICS |
JPM INDIAN and CEOTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM INDIAN and CEOTRONICS
The main advantage of trading using opposite JPM INDIAN and CEOTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM INDIAN position performs unexpectedly, CEOTRONICS 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 CEOTRONICS will offset losses from the drop in CEOTRONICS's long position.The idea behind JPM INDIAN INVT and CEOTRONICS 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.| CEOTRONICS vs. Xenia Hotels Resorts | CEOTRONICS vs. Wyndham Hotels Resorts | CEOTRONICS vs. NH HOTEL GROUP | CEOTRONICS vs. Japan Asia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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