Correlation Between Eastroc Beverage and Juneyao Airlines

Can any of the company-specific risk be diversified away by investing in both Eastroc Beverage and Juneyao Airlines 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 Eastroc Beverage and Juneyao Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastroc Beverage Group and Juneyao Airlines, you can compare the effects of market volatilities on Eastroc Beverage and Juneyao Airlines 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 Eastroc Beverage with a short position of Juneyao Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and Juneyao Airlines.

Diversification Opportunities for Eastroc Beverage and Juneyao Airlines

0.31

Correlation Coefficient

Eastroc Beverage  Juneyao Airlines

Weak diversification

The 3 months correlation between Eastroc and Juneyao is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and Juneyao Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juneyao Airlines and Eastroc Beverage 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 Eastroc Beverage Group are associated (or correlated) with Juneyao Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juneyao Airlines has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and Juneyao Airlines go up and down completely randomly.

Pair Corralation between Eastroc Beverage and Juneyao Airlines

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to under-perform the Juneyao Airlines. In addition to that, Eastroc Beverage is 1.17 times more volatile than Juneyao Airlines. It trades about -0.03 of its total potential returns per unit of risk. Juneyao Airlines is currently generating about -0.03 per unit of volatility. If you would invest  1,430  in Juneyao Airlines on December 25, 2024 and sell it today you would lose (70.00) from holding Juneyao Airlines or give up 4.9% of portfolio value over 90 days.

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

Eastroc Beverage Group  vs.  Juneyao Airlines

Eastroc Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastroc Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eastroc Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Juneyao Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Juneyao Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Juneyao Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eastroc Beverage and Juneyao Airlines

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

The idea behind Eastroc Beverage Group and Juneyao Airlines 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.