Correlation Between LARGAN Precision and Jung Shing

Can any of the company-specific risk be diversified away by investing in both LARGAN Precision and Jung Shing 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 LARGAN Precision and Jung Shing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LARGAN Precision Co and Jung Shing Wire, you can compare the effects of market volatilities on LARGAN Precision and Jung Shing 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 LARGAN Precision with a short position of Jung Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of LARGAN Precision and Jung Shing.

Diversification Opportunities for LARGAN Precision and Jung Shing

-0.46

Correlation Coefficient

LARGAN Precision  Jung Shing

Very good diversification

The 3 months correlation between LARGAN and Jung is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and Jung Shing Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jung Shing Wire and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with Jung Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jung Shing Wire has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and Jung Shing go up and down completely randomly.

Pair Corralation between LARGAN Precision and Jung Shing

Assuming the 90 days trading horizon LARGAN Precision Co is expected to under-perform the Jung Shing. But the stock apears to be less risky and, when comparing its historical volatility, LARGAN Precision Co is 1.36 times less risky than Jung Shing. The stock trades about -0.01 of its potential returns per unit of risk. The Jung Shing Wire is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,750  in Jung Shing Wire on December 21, 2024 and sell it today you would earn a total of  45.00  from holding Jung Shing Wire or generate 2.57% return on investment over 90 days.

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

LARGAN Precision Co  vs.  Jung Shing Wire

LARGAN Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days LARGAN Precision Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LARGAN Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jung Shing Wire

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jung Shing Wire are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Jung Shing 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 LARGAN Precision and Jung Shing

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

The idea behind LARGAN Precision Co and Jung Shing Wire 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.