Correlation Between JCHX Mining and Offshore Oil

Can any of the company-specific risk be diversified away by investing in both JCHX Mining and Offshore Oil 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 JCHX Mining and Offshore Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JCHX Mining Management and Offshore Oil Engineering, you can compare the effects of market volatilities on JCHX Mining and Offshore Oil 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 JCHX Mining with a short position of Offshore Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of JCHX Mining and Offshore Oil.

Diversification Opportunities for JCHX Mining and Offshore Oil

0.62

Correlation Coefficient

JCHX Mining  Offshore Oil

Poor diversification

The 3 months correlation between JCHX and Offshore is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding JCHX Mining Management and Offshore Oil Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Offshore Oil Engineering and JCHX Mining 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 JCHX Mining Management are associated (or correlated) with Offshore Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Offshore Oil Engineering has no effect on the direction of JCHX Mining i.e., JCHX Mining and Offshore Oil go up and down completely randomly.

Pair Corralation between JCHX Mining and Offshore Oil

Assuming the 90 days trading horizon JCHX Mining Management is expected to under-perform the Offshore Oil. In addition to that, JCHX Mining is 1.78 times more volatile than Offshore Oil Engineering. It trades about -0.11 of its total potential returns per unit of risk. Offshore Oil Engineering is currently generating about -0.11 per unit of volatility. If you would invest  563.00  in Offshore Oil Engineering on September 4, 2024 and sell it today you would lose (20.00) from holding Offshore Oil Engineering or give up 3.55% of portfolio value over 90 days.

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

JCHX Mining Management  vs.  Offshore Oil Engineering

JCHX Mining Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JCHX Mining Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JCHX Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Offshore Oil Engineering

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Offshore Oil Engineering are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Offshore Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JCHX Mining and Offshore Oil

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

The idea behind JCHX Mining Management and Offshore Oil Engineering 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..