Correlation Between Alton Sports and Jahwa Electron

Can any of the company-specific risk be diversified away by investing in both Alton Sports and Jahwa Electron 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 Alton Sports and Jahwa Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alton Sports CoLtd and Jahwa Electron, you can compare the effects of market volatilities on Alton Sports and Jahwa Electron 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 Alton Sports with a short position of Jahwa Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Jahwa Electron.

Diversification Opportunities for Alton Sports and Jahwa Electron

0.19

Correlation Coefficient

Alton Sports  Jahwa Electron

Average diversification

The 3 months correlation between Alton and Jahwa is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Jahwa Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jahwa Electron and Alton Sports 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 Alton Sports CoLtd are associated (or correlated) with Jahwa Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jahwa Electron has no effect on the direction of Alton Sports i.e., Alton Sports and Jahwa Electron go up and down completely randomly.

Pair Corralation between Alton Sports and Jahwa Electron

Assuming the 90 days trading horizon Alton Sports is expected to generate 9.81 times less return on investment than Jahwa Electron. But when comparing it to its historical volatility, Alton Sports CoLtd is 2.11 times less risky than Jahwa Electron. It trades about 0.01 of its potential returns per unit of risk. Jahwa Electron is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,280,000  in Jahwa Electron on November 28, 2024 and sell it today you would earn a total of  124,000  from holding Jahwa Electron or generate 9.69% return on investment over 90 days.

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

Alton Sports CoLtd  vs.  Jahwa Electron

Alton Sports CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alton Sports CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alton Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jahwa Electron

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jahwa Electron are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jahwa Electron sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alton Sports and Jahwa Electron

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

The idea behind Alton Sports CoLtd and Jahwa Electron 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 Anywhere module to track or share privately all of your investments from the convenience of any device.