Correlation Between Planet Technology and Jia Jie

Can any of the company-specific risk be diversified away by investing in both Planet Technology and Jia Jie 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 Planet Technology and Jia Jie into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Planet Technology and Jia Jie Biomedical, you can compare the effects of market volatilities on Planet Technology and Jia Jie 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 Planet Technology with a short position of Jia Jie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Technology and Jia Jie.

Diversification Opportunities for Planet Technology and Jia Jie

0.9

Correlation Coefficient

Planet Technology  Jia Jie

Almost no diversification

The 3 months correlation between Planet and Jia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Planet Technology and Jia Jie Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jia Jie Biomedical and Planet Technology 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 Planet Technology are associated (or correlated) with Jia Jie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jia Jie Biomedical has no effect on the direction of Planet Technology i.e., Planet Technology and Jia Jie go up and down completely randomly.

Pair Corralation between Planet Technology and Jia Jie

Assuming the 90 days trading horizon Planet Technology is expected to generate 0.6 times more return on investment than Jia Jie. However, Planet Technology is 1.67 times less risky than Jia Jie. It trades about -0.13 of its potential returns per unit of risk. Jia Jie Biomedical is currently generating about -0.23 per unit of risk. If you would invest  17,100  in Planet Technology on October 10, 2024 and sell it today you would lose (1,600) from holding Planet Technology or give up 9.36% of portfolio value over 90 days.

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

Planet Technology  vs.  Jia Jie Biomedical

Planet Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Planet Technology 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.

Jia Jie Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jia Jie Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Planet Technology and Jia Jie

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

The idea behind Planet Technology and Jia Jie Biomedical 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.