Correlation Between Jin Air and Sam A

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

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

Diversification Opportunities for Jin Air and Sam A

0.41

Correlation Coefficient

Jin Air  Sam A

Very weak diversification

The 3 months correlation between Jin and Sam is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air Co and Sam A Pharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam A Pharm and Jin Air 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 Jin Air Co are associated (or correlated) with Sam A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam A Pharm has no effect on the direction of Jin Air i.e., Jin Air and Sam A go up and down completely randomly.

Pair Corralation between Jin Air and Sam A

Assuming the 90 days trading horizon Jin Air Co is expected to generate 1.13 times more return on investment than Sam A. However, Jin Air is 1.13 times more volatile than Sam A Pharm Co. It trades about 0.16 of its potential returns per unit of risk. Sam A Pharm Co is currently generating about 0.02 per unit of risk. If you would invest  986,000  in Jin Air Co on October 27, 2024 and sell it today you would earn a total of  46,000  from holding Jin Air Co or generate 4.67% return on investment over 90 days.

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

Jin Air Co  vs.  Sam A Pharm Co

Jin Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jin Air Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Sam A Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sam A Pharm Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jin Air and Sam A

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

The idea behind Jin Air Co and Sam A Pharm 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.