Correlation Between Ju Teng and Gourmet Master

Can any of the company-specific risk be diversified away by investing in both Ju Teng and Gourmet Master 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 Ju Teng and Gourmet Master into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ju Teng International and Gourmet Master Co, you can compare the effects of market volatilities on Ju Teng and Gourmet Master 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 Ju Teng with a short position of Gourmet Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ju Teng and Gourmet Master.

Diversification Opportunities for Ju Teng and Gourmet Master

0.04

Correlation Coefficient

Ju Teng  Gourmet Master

Significant diversification

The 3 months correlation between 9136 and Gourmet is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ju Teng International and Gourmet Master Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gourmet Master and Ju Teng 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 Ju Teng International are associated (or correlated) with Gourmet Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gourmet Master has no effect on the direction of Ju Teng i.e., Ju Teng and Gourmet Master go up and down completely randomly.

Pair Corralation between Ju Teng and Gourmet Master

Assuming the 90 days trading horizon Ju Teng International is expected to generate 1.23 times more return on investment than Gourmet Master. However, Ju Teng is 1.23 times more volatile than Gourmet Master Co. It trades about 0.16 of its potential returns per unit of risk. Gourmet Master Co is currently generating about -0.03 per unit of risk. If you would invest  652.00  in Ju Teng International on December 30, 2024 and sell it today you would earn a total of  148.00  from holding Ju Teng International or generate 22.7% return on investment over 90 days.

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

Ju Teng International  vs.  Gourmet Master Co

Ju Teng International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ju Teng International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ju Teng showed solid returns over the last few months and may actually be approaching a breakup point.

Gourmet Master

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gourmet Master Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gourmet Master is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ju Teng and Gourmet Master

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

The idea behind Ju Teng International and Gourmet Master 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.