Correlation Between Display Tech and Jin Air

Can any of the company-specific risk be diversified away by investing in both Display Tech and Jin Air 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 Display Tech and Jin Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Display Tech Co and Jin Air Co, you can compare the effects of market volatilities on Display Tech and Jin Air 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 Display Tech with a short position of Jin Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Display Tech and Jin Air.

Diversification Opportunities for Display Tech and Jin Air

-0.14

Correlation Coefficient

Display Tech  Jin Air

Good diversification

The 3 months correlation between Display and Jin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Display Tech Co and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air and Display Tech 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 Display Tech Co are associated (or correlated) with Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Display Tech i.e., Display Tech and Jin Air go up and down completely randomly.

Pair Corralation between Display Tech and Jin Air

Assuming the 90 days trading horizon Display Tech Co is expected to generate 1.18 times more return on investment than Jin Air. However, Display Tech is 1.18 times more volatile than Jin Air Co. It trades about 0.13 of its potential returns per unit of risk. Jin Air Co is currently generating about 0.04 per unit of risk. If you would invest  254,500  in Display Tech Co on December 7, 2024 and sell it today you would earn a total of  37,500  from holding Display Tech Co or generate 14.73% return on investment over 90 days.

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

Display Tech Co  vs.  Jin Air Co

Display Tech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Display Tech Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Display Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Jin Air

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jin Air Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jin Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Display Tech and Jin Air

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

The idea behind Display Tech Co and Jin Air Co 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.