Correlation Between MClean Technologies and JF Technology

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

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

Diversification Opportunities for MClean Technologies and JF Technology

0.79

Correlation Coefficient

MClean Technologies  JF Technology

Poor diversification

The 3 months correlation between MClean and 0146 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and JF Technology BHD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JF Technology BHD and MClean Technologies 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 MClean Technologies Bhd are associated (or correlated) with JF Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JF Technology BHD has no effect on the direction of MClean Technologies i.e., MClean Technologies and JF Technology go up and down completely randomly.

Pair Corralation between MClean Technologies and JF Technology

Assuming the 90 days trading horizon MClean Technologies is expected to generate 3.37 times less return on investment than JF Technology. But when comparing it to its historical volatility, MClean Technologies Bhd is 1.47 times less risky than JF Technology. It trades about 0.15 of its potential returns per unit of risk. JF Technology BHD is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  50.00  in JF Technology BHD on September 30, 2024 and sell it today you would earn a total of  34.00  from holding JF Technology BHD or generate 68.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MClean Technologies Bhd  vs.  JF Technology BHD

MClean Technologies Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MClean Technologies Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MClean Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

JF Technology BHD

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JF Technology BHD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, JF Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MClean Technologies and JF Technology

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

The idea behind MClean Technologies Bhd and JF Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.