Correlation Between Pan Asia and Jetwell Computer

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

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

Diversification Opportunities for Pan Asia and Jetwell Computer

0.67

Correlation Coefficient

Pan Asia  Jetwell Computer

Poor diversification

The 3 months correlation between Pan and Jetwell is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pan Asia Chemical and Jetwell Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jetwell Computer and Pan Asia 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 Pan Asia Chemical are associated (or correlated) with Jetwell Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jetwell Computer has no effect on the direction of Pan Asia i.e., Pan Asia and Jetwell Computer go up and down completely randomly.

Pair Corralation between Pan Asia and Jetwell Computer

Assuming the 90 days trading horizon Pan Asia is expected to generate 5.11 times less return on investment than Jetwell Computer. But when comparing it to its historical volatility, Pan Asia Chemical is 2.38 times less risky than Jetwell Computer. It trades about 0.04 of its potential returns per unit of risk. Jetwell Computer Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,370  in Jetwell Computer Co on September 17, 2024 and sell it today you would earn a total of  6,430  from holding Jetwell Computer Co or generate 68.62% return on investment over 90 days.

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

Pan Asia Chemical  vs.  Jetwell Computer Co

Pan Asia Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jetwell Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jetwell Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Jetwell Computer 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 Pan Asia and Jetwell Computer

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

The idea behind Pan Asia Chemical and Jetwell 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.