Correlation Between Provision Information and Jetwell Computer

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

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

Diversification Opportunities for Provision Information and Jetwell Computer

0.81

Correlation Coefficient

Provision Information  Jetwell Computer

Very poor diversification

The 3 months correlation between Provision and Jetwell is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Provision Information CoLtd and Jetwell Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jetwell Computer and Provision Information 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 Provision Information CoLtd 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 Provision Information i.e., Provision Information and Jetwell Computer go up and down completely randomly.

Pair Corralation between Provision Information and Jetwell Computer

Assuming the 90 days trading horizon Provision Information CoLtd is expected to under-perform the Jetwell Computer. But the stock apears to be less risky and, when comparing its historical volatility, Provision Information CoLtd is 2.21 times less risky than Jetwell Computer. The stock trades about -0.04 of its potential returns per unit of risk. The Jetwell Computer Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  13,000  in Jetwell Computer Co on December 4, 2024 and sell it today you would earn a total of  6,550  from holding Jetwell Computer Co or generate 50.38% return on investment over 90 days.

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

Provision Information CoLtd  vs.  Jetwell Computer Co

Provision Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Provision Information showed solid returns over the last few months and may actually be approaching a breakup point.

Jetwell Computer

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jetwell Computer Co are ranked lower than 15 (%) 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 Provision Information and Jetwell Computer

The main advantage of trading using opposite Provision Information and Jetwell Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provision Information 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 Provision Information CoLtd 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.