Correlation Between Jentech Precision and Unitech Computer

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

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

Diversification Opportunities for Jentech Precision and Unitech Computer

0.5

Correlation Coefficient

Jentech Precision  Unitech Computer

Very weak diversification

The 3 months correlation between Jentech and Unitech is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jentech Precision Industrial and Unitech Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Computer and Jentech 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 Jentech Precision Industrial are associated (or correlated) with Unitech Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Computer has no effect on the direction of Jentech Precision i.e., Jentech Precision and Unitech Computer go up and down completely randomly.

Pair Corralation between Jentech Precision and Unitech Computer

Assuming the 90 days trading horizon Jentech Precision Industrial is expected to generate 3.0 times more return on investment than Unitech Computer. However, Jentech Precision is 3.0 times more volatile than Unitech Computer Co. It trades about 0.1 of its potential returns per unit of risk. Unitech Computer Co is currently generating about 0.19 per unit of risk. If you would invest  130,000  in Jentech Precision Industrial on September 12, 2024 and sell it today you would earn a total of  21,000  from holding Jentech Precision Industrial or generate 16.15% return on investment over 90 days.

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

Jentech Precision Industrial  vs.  Unitech Computer Co

Jentech Precision

Risk-Adjusted Performance

7 of 100

OK

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

Unitech Computer

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unitech Computer Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Unitech Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jentech Precision and Unitech Computer

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

The idea behind Jentech Precision Industrial and Unitech Computer 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.