Correlation Between China Jo and Café Serendipity
Can any of the company-specific risk be diversified away by investing in both China Jo and Café Serendipity 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 China Jo and Café Serendipity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Jo Jo Drugstores and Caf Serendipity Holdings, you can compare the effects of market volatilities on China Jo and Café Serendipity 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 China Jo with a short position of Café Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Jo and Café Serendipity.
Diversification Opportunities for China Jo and Café Serendipity
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Café is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and China Jo 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 China Jo Jo Drugstores are associated (or correlated) with Café Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of China Jo i.e., China Jo and Café Serendipity go up and down completely randomly.
Pair Corralation between China Jo and Café Serendipity
Given the investment horizon of 90 days China Jo Jo Drugstores is expected to under-perform the Café Serendipity. But the stock apears to be less risky and, when comparing its historical volatility, China Jo Jo Drugstores is 9.45 times less risky than Café Serendipity. The stock trades about -0.06 of its potential returns per unit of risk. The Caf Serendipity Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Caf Serendipity Holdings on September 2, 2024 and sell it today you would lose (3.98) from holding Caf Serendipity Holdings or give up 99.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Jo Jo Drugstores vs. Caf Serendipity Holdings
Performance |
| Timeline |
| China Jo Jo |
| Caf Serendipity Holdings |
China Jo and Café Serendipity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Jo and Café Serendipity
The main advantage of trading using opposite China Jo and Café Serendipity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Jo position performs unexpectedly, Café Serendipity 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 Café Serendipity will offset losses from the drop in Café Serendipity's long position.| China Jo vs. SunLink Health Systems | China Jo vs. Leafly Holdings | China Jo vs. Allstar Health Brands | China Jo vs. Walgreens Boots Alliance |
| Café Serendipity vs. China Jo Jo Drugstores | Café Serendipity vs. SunLink Health Systems | Café Serendipity vs. Leafly Holdings | Café Serendipity vs. PetMed Express |
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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