Correlation Between COFCO Joycome and Public Storage

Can any of the company-specific risk be diversified away by investing in both COFCO Joycome and Public Storage 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 COFCO Joycome and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COFCO Joycome Foods and Public Storage, you can compare the effects of market volatilities on COFCO Joycome and Public Storage 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 COFCO Joycome with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFCO Joycome and Public Storage.

Diversification Opportunities for COFCO Joycome and Public Storage

0.25

Correlation Coefficient

COFCO Joycome  Public Storage

Modest diversification

The 3 months correlation between COFCO and Public is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding COFCO Joycome Foods and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and COFCO Joycome 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 COFCO Joycome Foods are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of COFCO Joycome i.e., COFCO Joycome and Public Storage go up and down completely randomly.

Pair Corralation between COFCO Joycome and Public Storage

Assuming the 90 days horizon COFCO Joycome Foods is expected to under-perform the Public Storage. In addition to that, COFCO Joycome is 1.38 times more volatile than Public Storage. It trades about -0.13 of its total potential returns per unit of risk. Public Storage is currently generating about 0.05 per unit of volatility. If you would invest  27,670  in Public Storage on October 21, 2024 and sell it today you would earn a total of  370.00  from holding Public Storage or generate 1.34% return on investment over 90 days.

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

COFCO Joycome Foods  vs.  Public Storage

COFCO Joycome Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COFCO Joycome is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Public Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COFCO Joycome and Public Storage

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

The idea behind COFCO Joycome Foods and Public Storage 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.