Correlation Between Asia Aviation and JMT Network

Can any of the company-specific risk be diversified away by investing in both Asia Aviation and JMT Network 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 Asia Aviation and JMT Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Aviation Public and JMT Network Services, you can compare the effects of market volatilities on Asia Aviation and JMT Network 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 Asia Aviation with a short position of JMT Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Aviation and JMT Network.

Diversification Opportunities for Asia Aviation and JMT Network

0.33

Correlation Coefficient

Asia Aviation  JMT Network

Weak diversification

The 3 months correlation between Asia and JMT is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Asia Aviation Public and JMT Network Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JMT Network Services and Asia Aviation 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 Asia Aviation Public are associated (or correlated) with JMT Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JMT Network Services has no effect on the direction of Asia Aviation i.e., Asia Aviation and JMT Network go up and down completely randomly.

Pair Corralation between Asia Aviation and JMT Network

Assuming the 90 days trading horizon Asia Aviation Public is expected to under-perform the JMT Network. But the stock apears to be less risky and, when comparing its historical volatility, Asia Aviation Public is 1.61 times less risky than JMT Network. The stock trades about -0.01 of its potential returns per unit of risk. The JMT Network Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,880  in JMT Network Services on September 12, 2024 and sell it today you would earn a total of  50.00  from holding JMT Network Services or generate 2.66% return on investment over 90 days.

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

Asia Aviation Public  vs.  JMT Network Services

Asia Aviation Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Aviation Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Aviation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JMT Network Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JMT Network Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, JMT Network is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asia Aviation and JMT Network

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

The idea behind Asia Aviation Public and JMT Network Services 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.