Correlation Between Railway Signal and JCHX Mining

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

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

Diversification Opportunities for Railway Signal and JCHX Mining

-0.16

Correlation Coefficient

Railway Signal  JCHX Mining

Good diversification

The 3 months correlation between Railway and JCHX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Railway Signal Communication and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management and Railway Signal 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 Railway Signal Communication are associated (or correlated) with JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Railway Signal i.e., Railway Signal and JCHX Mining go up and down completely randomly.

Pair Corralation between Railway Signal and JCHX Mining

Assuming the 90 days trading horizon Railway Signal Communication is expected to generate 0.95 times more return on investment than JCHX Mining. However, Railway Signal Communication is 1.05 times less risky than JCHX Mining. It trades about 0.02 of its potential returns per unit of risk. JCHX Mining Management is currently generating about -0.06 per unit of risk. If you would invest  602.00  in Railway Signal Communication on September 30, 2024 and sell it today you would earn a total of  19.00  from holding Railway Signal Communication or generate 3.16% return on investment over 90 days.

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

Railway Signal Communication  vs.  JCHX Mining Management

Railway Signal Commu

Risk-Adjusted Performance

0 of 100

Very Weak

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

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCHX Mining Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Railway Signal and JCHX Mining

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

The idea behind Railway Signal Communication and JCHX Mining Management 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.