Correlation Between Jetwell Computer and Ligitek Electronics

Can any of the company-specific risk be diversified away by investing in both Jetwell Computer and Ligitek Electronics 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 Jetwell Computer and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jetwell Computer Co and Ligitek Electronics Co, you can compare the effects of market volatilities on Jetwell Computer and Ligitek Electronics 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 Jetwell Computer with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jetwell Computer and Ligitek Electronics.

Diversification Opportunities for Jetwell Computer and Ligitek Electronics

0.9

Correlation Coefficient

Jetwell Computer  Ligitek Electronics

Almost no diversification

The 3 months correlation between Jetwell and Ligitek is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Jetwell Computer Co and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and Jetwell Computer 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 Jetwell Computer Co are associated (or correlated) with Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Jetwell Computer i.e., Jetwell Computer and Ligitek Electronics go up and down completely randomly.

Pair Corralation between Jetwell Computer and Ligitek Electronics

Assuming the 90 days trading horizon Jetwell Computer is expected to generate 1.3 times less return on investment than Ligitek Electronics. In addition to that, Jetwell Computer is 1.05 times more volatile than Ligitek Electronics Co. It trades about 0.1 of its total potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.13 per unit of volatility. If you would invest  2,080  in Ligitek Electronics Co on October 10, 2024 and sell it today you would earn a total of  3,100  from holding Ligitek Electronics Co or generate 149.04% return on investment over 90 days.

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

Jetwell Computer Co  vs.  Ligitek Electronics Co

Jetwell Computer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jetwell Computer Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jetwell Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Ligitek Electronics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ligitek Electronics Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ligitek Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jetwell Computer and Ligitek Electronics

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

The idea behind Jetwell Computer Co and Ligitek Electronics 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.