Correlation Between Federal Agricultural and Jianpu Technology
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Jianpu 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 Federal Agricultural and Jianpu Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Jianpu Technology, you can compare the effects of market volatilities on Federal Agricultural and Jianpu 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 Federal Agricultural with a short position of Jianpu Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Jianpu Technology.
Diversification Opportunities for Federal Agricultural and Jianpu Technology
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and Jianpu is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Jianpu Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianpu Technology and Federal Agricultural 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 Federal Agricultural Mortgage are associated (or correlated) with Jianpu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jianpu Technology has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Jianpu Technology go up and down completely randomly.
Pair Corralation between Federal Agricultural and Jianpu Technology
If you would invest 131.00 in Jianpu Technology on November 1, 2024 and sell it today you would earn a total of 0.00 from holding Jianpu Technology or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 1.67% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Jianpu Technology
Performance |
| Timeline |
| Federal Agricultural |
| Jianpu Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Federal Agricultural and Jianpu Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Jianpu Technology
The main advantage of trading using opposite Federal Agricultural and Jianpu Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Jianpu 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 Jianpu Technology will offset losses from the drop in Jianpu Technology's long position.The idea behind Federal Agricultural Mortgage and Jianpu Technology 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.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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