Correlation Between President Chain and Kerry TJ

Can any of the company-specific risk be diversified away by investing in both President Chain and Kerry TJ 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 President Chain and Kerry TJ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between President Chain Store and Kerry TJ Logistics, you can compare the effects of market volatilities on President Chain and Kerry TJ 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 President Chain with a short position of Kerry TJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Kerry TJ.

Diversification Opportunities for President Chain and Kerry TJ

-0.04

Correlation Coefficient

President Chain  Kerry TJ

Good diversification

The 3 months correlation between President and Kerry is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Kerry TJ Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry TJ Logistics and President Chain 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 President Chain Store are associated (or correlated) with Kerry TJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry TJ Logistics has no effect on the direction of President Chain i.e., President Chain and Kerry TJ go up and down completely randomly.

Pair Corralation between President Chain and Kerry TJ

Assuming the 90 days trading horizon President Chain Store is expected to under-perform the Kerry TJ. In addition to that, President Chain is 1.13 times more volatile than Kerry TJ Logistics. It trades about -0.02 of its total potential returns per unit of risk. Kerry TJ Logistics is currently generating about -0.01 per unit of volatility. If you would invest  3,925  in Kerry TJ Logistics on September 16, 2024 and sell it today you would lose (5.00) from holding Kerry TJ Logistics or give up 0.13% of portfolio value over 90 days.

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

President Chain Store  vs.  Kerry TJ Logistics

President Chain Store

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Chain Store has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Kerry TJ Logistics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kerry TJ Logistics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kerry TJ is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with President Chain and Kerry TJ

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

The idea behind President Chain Store and Kerry TJ Logistics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.