Correlation Between JF Technology and Sunway Construction

Can any of the company-specific risk be diversified away by investing in both JF Technology and Sunway Construction 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 JF Technology and Sunway Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for JF Technology and Sunway Construction

-0.5

Correlation Coefficient

JF Technology  Sunway Construction

Very good diversification

The 3 months correlation between 0146 and Sunway is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JF Technology BHD and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction and JF Technology 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 JF Technology BHD are associated (or correlated) with Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of JF Technology i.e., JF Technology and Sunway Construction go up and down completely randomly.

Pair Corralation between JF Technology and Sunway Construction

Assuming the 90 days trading horizon JF Technology BHD is expected to under-perform the Sunway Construction. In addition to that, JF Technology is 1.05 times more volatile than Sunway Construction Group. It trades about -0.18 of its total potential returns per unit of risk. Sunway Construction Group is currently generating about 0.08 per unit of volatility. If you would invest  399.00  in Sunway Construction Group on September 4, 2024 and sell it today you would earn a total of  41.00  from holding Sunway Construction Group or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JF Technology BHD  vs.  Sunway Construction Group

JF Technology BHD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JF Technology 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sunway Construction

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunway Construction Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sunway Construction may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JF Technology and Sunway Construction

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

The idea behind JF Technology BHD and Sunway Construction Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.