Correlation Between JAG Bhd and Datasonic Group

Can any of the company-specific risk be diversified away by investing in both JAG Bhd and Datasonic Group 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 JAG Bhd and Datasonic Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JAG Bhd and Datasonic Group Bhd, you can compare the effects of market volatilities on JAG Bhd and Datasonic Group 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 JAG Bhd with a short position of Datasonic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAG Bhd and Datasonic Group.

Diversification Opportunities for JAG Bhd and Datasonic Group

0.82

Correlation Coefficient

JAG Bhd  Datasonic Group

Very poor diversification

The 3 months correlation between JAG and Datasonic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JAG Bhd and Datasonic Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasonic Group Bhd and JAG Bhd 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 JAG Bhd are associated (or correlated) with Datasonic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasonic Group Bhd has no effect on the direction of JAG Bhd i.e., JAG Bhd and Datasonic Group go up and down completely randomly.

Pair Corralation between JAG Bhd and Datasonic Group

Assuming the 90 days trading horizon JAG Bhd is expected to generate 0.77 times more return on investment than Datasonic Group. However, JAG Bhd is 1.3 times less risky than Datasonic Group. It trades about -0.11 of its potential returns per unit of risk. Datasonic Group Bhd is currently generating about -0.15 per unit of risk. If you would invest  32.00  in JAG Bhd on November 28, 2024 and sell it today you would lose (5.00) from holding JAG Bhd or give up 15.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

JAG Bhd  vs.  Datasonic Group Bhd

JAG Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days JAG Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Datasonic Group Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Datasonic Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with JAG Bhd and Datasonic Group

The main advantage of trading using opposite JAG Bhd and Datasonic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAG Bhd position performs unexpectedly, Datasonic Group 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 Datasonic Group will offset losses from the drop in Datasonic Group's long position.

The idea behind JAG Bhd and Datasonic Group Bhd 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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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.