Correlation Between JAKS Resources and PESTECH International

Can any of the company-specific risk be diversified away by investing in both JAKS Resources and PESTECH International 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 JAKS Resources and PESTECH International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JAKS Resources Bhd and PESTECH International Bhd, you can compare the effects of market volatilities on JAKS Resources and PESTECH International 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 JAKS Resources with a short position of PESTECH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAKS Resources and PESTECH International.

Diversification Opportunities for JAKS Resources and PESTECH International

0.36

Correlation Coefficient

JAKS Resources  PESTECH International

Weak diversification

The 3 months correlation between JAKS and PESTECH is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding JAKS Resources Bhd and PESTECH International Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PESTECH International Bhd and JAKS Resources 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 JAKS Resources Bhd are associated (or correlated) with PESTECH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PESTECH International Bhd has no effect on the direction of JAKS Resources i.e., JAKS Resources and PESTECH International go up and down completely randomly.

Pair Corralation between JAKS Resources and PESTECH International

Assuming the 90 days trading horizon JAKS Resources Bhd is expected to under-perform the PESTECH International. But the stock apears to be less risky and, when comparing its historical volatility, JAKS Resources Bhd is 1.03 times less risky than PESTECH International. The stock trades about -0.07 of its potential returns per unit of risk. The PESTECH International Bhd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  19.00  in PESTECH International Bhd on December 24, 2024 and sell it today you would lose (3.00) from holding PESTECH International Bhd or give up 15.79% of portfolio value over 90 days.

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

JAKS Resources Bhd  vs.  PESTECH International Bhd

JAKS Resources Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days JAKS Resources Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PESTECH International Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days PESTECH International Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with JAKS Resources and PESTECH International

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

The idea behind JAKS Resources Bhd and PESTECH International Bhd 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.