Correlation Between Jay Mart and Union Petrochemical
Can any of the company-specific risk be diversified away by investing in both Jay Mart and Union Petrochemical 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 Jay Mart and Union Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jay Mart Public and Union Petrochemical Public, you can compare the effects of market volatilities on Jay Mart and Union Petrochemical 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 Jay Mart with a short position of Union Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jay Mart and Union Petrochemical.
Diversification Opportunities for Jay Mart and Union Petrochemical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jay and Union is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Jay Mart Public and Union Petrochemical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Petrochemical and Jay Mart 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 Jay Mart Public are associated (or correlated) with Union Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Petrochemical has no effect on the direction of Jay Mart i.e., Jay Mart and Union Petrochemical go up and down completely randomly.
Pair Corralation between Jay Mart and Union Petrochemical
Assuming the 90 days trading horizon Jay Mart Public is expected to under-perform the Union Petrochemical. But the stock apears to be less risky and, when comparing its historical volatility, Jay Mart Public is 11.55 times less risky than Union Petrochemical. The stock trades about -0.04 of its potential returns per unit of risk. The Union Petrochemical Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 158.00 in Union Petrochemical Public on August 26, 2024 and sell it today you would lose (89.00) from holding Union Petrochemical Public or give up 56.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jay Mart Public vs. Union Petrochemical Public
Performance |
| Timeline |
| Jay Mart Public |
| Union Petrochemical |
Jay Mart and Union Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jay Mart and Union Petrochemical
The main advantage of trading using opposite Jay Mart and Union Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jay Mart position performs unexpectedly, Union Petrochemical 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 Union Petrochemical will offset losses from the drop in Union Petrochemical's long position.| Jay Mart vs. JMT Network Services | Jay Mart vs. Com7 PCL | Jay Mart vs. KCE Electronics Public | Jay Mart vs. Singer Thailand Public |
| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel Public | Union Petrochemical vs. TPI Polene Public |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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