Correlation Between Masterwork Machinery and JCHX Mining

Can any of the company-specific risk be diversified away by investing in both Masterwork Machinery and JCHX Mining 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 Masterwork Machinery and JCHX Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Masterwork Machinery and JCHX Mining Management, you can compare the effects of market volatilities on Masterwork Machinery and JCHX Mining 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 Masterwork Machinery with a short position of JCHX Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masterwork Machinery and JCHX Mining.

Diversification Opportunities for Masterwork Machinery and JCHX Mining

-0.47

Correlation Coefficient

Masterwork Machinery  JCHX Mining

Very good diversification

The 3 months correlation between Masterwork and JCHX is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Masterwork Machinery and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management and Masterwork Machinery 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 Masterwork Machinery are associated (or correlated) with JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Masterwork Machinery i.e., Masterwork Machinery and JCHX Mining go up and down completely randomly.

Pair Corralation between Masterwork Machinery and JCHX Mining

Assuming the 90 days trading horizon Masterwork Machinery is expected to under-perform the JCHX Mining. In addition to that, Masterwork Machinery is 1.51 times more volatile than JCHX Mining Management. It trades about -0.33 of its total potential returns per unit of risk. JCHX Mining Management is currently generating about -0.22 per unit of volatility. If you would invest  3,940  in JCHX Mining Management on October 4, 2024 and sell it today you would lose (310.00) from holding JCHX Mining Management or give up 7.87% of portfolio value over 90 days.

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

Masterwork Machinery  vs.  JCHX Mining Management

Masterwork Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Masterwork Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Masterwork Machinery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCHX Mining Management 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 Masterwork Machinery and JCHX Mining

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

The idea behind Masterwork Machinery and JCHX Mining Management 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..