Correlation Between San Fu and Jetwell Computer

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

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

Diversification Opportunities for San Fu and Jetwell Computer

0.04

Correlation Coefficient

San Fu  Jetwell Computer

Significant diversification

The 3 months correlation between San and Jetwell is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding San Fu 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 San Fu 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 San Fu 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 San Fu i.e., San Fu and Jetwell Computer go up and down completely randomly.

Pair Corralation between San Fu and Jetwell Computer

Assuming the 90 days trading horizon San Fu Chemical is expected to under-perform the Jetwell Computer. But the stock apears to be less risky and, when comparing its historical volatility, San Fu Chemical is 2.37 times less risky than Jetwell Computer. The stock trades about -0.1 of its potential returns per unit of risk. The Jetwell Computer Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  17,000  in Jetwell Computer Co on December 23, 2024 and sell it today you would earn a total of  2,100  from holding Jetwell Computer Co or generate 12.35% return on investment over 90 days.

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

San Fu Chemical  vs.  Jetwell Computer Co

San Fu Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days San Fu Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Jetwell Computer

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jetwell Computer Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jetwell Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with San Fu and Jetwell Computer

The main advantage of trading using opposite San Fu and Jetwell Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu 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 San Fu 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.