Correlation Between ATA Creativity and Jackpot Digital

Can any of the company-specific risk be diversified away by investing in both ATA Creativity and Jackpot Digital 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 ATA Creativity and Jackpot Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATA Creativity Global and Jackpot Digital, you can compare the effects of market volatilities on ATA Creativity and Jackpot Digital 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 ATA Creativity with a short position of Jackpot Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATA Creativity and Jackpot Digital.

Diversification Opportunities for ATA Creativity and Jackpot Digital

-0.5

Correlation Coefficient

ATA Creativity  Jackpot Digital

Very good diversification

The 3 months correlation between ATA and Jackpot is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ATA Creativity Global and Jackpot Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackpot Digital and ATA Creativity 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 ATA Creativity Global are associated (or correlated) with Jackpot Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackpot Digital has no effect on the direction of ATA Creativity i.e., ATA Creativity and Jackpot Digital go up and down completely randomly.

Pair Corralation between ATA Creativity and Jackpot Digital

Given the investment horizon of 90 days ATA Creativity Global is expected to generate 0.55 times more return on investment than Jackpot Digital. However, ATA Creativity Global is 1.81 times less risky than Jackpot Digital. It trades about 0.07 of its potential returns per unit of risk. Jackpot Digital is currently generating about -0.01 per unit of risk. If you would invest  72.00  in ATA Creativity Global on September 26, 2024 and sell it today you would earn a total of  9.00  from holding ATA Creativity Global or generate 12.5% return on investment over 90 days.

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

ATA Creativity Global  vs.  Jackpot Digital

ATA Creativity Global

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATA Creativity Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, ATA Creativity reported solid returns over the last few months and may actually be approaching a breakup point.

Jackpot Digital

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Jackpot Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Jackpot Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ATA Creativity and Jackpot Digital

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

The idea behind ATA Creativity Global and Jackpot Digital 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.