Correlation Between Jin Air and Playgram

Can any of the company-specific risk be diversified away by investing in both Jin Air and Playgram 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 Playgram 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 Playgram Co, you can compare the effects of market volatilities on Jin Air and Playgram 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 Playgram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and Playgram.

Diversification Opportunities for Jin Air and Playgram

0.3

Correlation Coefficient

Jin Air  Playgram

Weak diversification

The 3 months correlation between Jin and Playgram is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air Co and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram 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 Playgram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playgram has no effect on the direction of Jin Air i.e., Jin Air and Playgram go up and down completely randomly.

Pair Corralation between Jin Air and Playgram

Assuming the 90 days trading horizon Jin Air is expected to generate 7.94 times less return on investment than Playgram. But when comparing it to its historical volatility, Jin Air Co is 1.33 times less risky than Playgram. It trades about 0.01 of its potential returns per unit of risk. Playgram Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  35,200  in Playgram Co on September 20, 2024 and sell it today you would earn a total of  4,500  from holding Playgram Co or generate 12.78% return on investment over 90 days.

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

Jin Air Co  vs.  Playgram 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.

Playgram

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Playgram Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Playgram sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jin Air and Playgram

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

The idea behind Jin Air Co and Playgram 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.