Correlation Between Jentech Precision and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Jentech Precision and Chernan Metal 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 Chernan Metal 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 Chernan Metal Industrial, you can compare the effects of market volatilities on Jentech Precision and Chernan Metal 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 Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jentech Precision and Chernan Metal.
Diversification Opportunities for Jentech Precision and Chernan Metal
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jentech and Chernan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jentech Precision Industrial and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Jentech Precision i.e., Jentech Precision and Chernan Metal go up and down completely randomly.
Pair Corralation between Jentech Precision and Chernan Metal
Assuming the 90 days trading horizon Jentech Precision Industrial is expected to generate 1.29 times more return on investment than Chernan Metal. However, Jentech Precision is 1.29 times more volatile than Chernan Metal Industrial. It trades about 0.1 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about 0.01 per unit of risk. If you would invest 38,150 in Jentech Precision Industrial on October 13, 2024 and sell it today you would earn a total of 100,850 from holding Jentech Precision Industrial or generate 264.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Jentech Precision Industrial vs. Chernan Metal Industrial
Performance |
Timeline |
Jentech Precision |
Chernan Metal Industrial |
Jentech Precision and Chernan Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jentech Precision and Chernan Metal
The main advantage of trading using opposite Jentech Precision and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jentech Precision position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.Jentech Precision vs. Lotes Co | Jentech Precision vs. Nan Ya Printed | Jentech Precision vs. Global Unichip Corp | Jentech Precision vs. Tong Hsing Electronic |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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