Correlation Between Jia Jie and KS Terminals

Can any of the company-specific risk be diversified away by investing in both Jia Jie and KS Terminals 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 Jia Jie and KS Terminals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jia Jie Biomedical and KS Terminals, you can compare the effects of market volatilities on Jia Jie and KS Terminals 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 Jia Jie with a short position of KS Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jia Jie and KS Terminals.

Diversification Opportunities for Jia Jie and KS Terminals

0.69

Correlation Coefficient

Jia Jie  KS Terminals

Poor diversification

The 3 months correlation between Jia and 3003 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jia Jie Biomedical and KS Terminals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS Terminals and Jia Jie 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 Jia Jie Biomedical are associated (or correlated) with KS Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS Terminals has no effect on the direction of Jia Jie i.e., Jia Jie and KS Terminals go up and down completely randomly.

Pair Corralation between Jia Jie and KS Terminals

Assuming the 90 days trading horizon Jia Jie Biomedical is expected to under-perform the KS Terminals. But the stock apears to be less risky and, when comparing its historical volatility, Jia Jie Biomedical is 1.28 times less risky than KS Terminals. The stock trades about -0.39 of its potential returns per unit of risk. The KS Terminals is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  8,000  in KS Terminals on September 25, 2024 and sell it today you would lose (260.00) from holding KS Terminals or give up 3.25% of portfolio value over 90 days.

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

Jia Jie Biomedical  vs.  KS Terminals

Jia Jie Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jia Jie Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

KS Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KS Terminals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Jia Jie and KS Terminals

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

The idea behind Jia Jie Biomedical and KS Terminals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.