Correlation Between Advanced Information and JCK Hospitality

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

By analyzing existing cross correlation between Advanced Information Technology and JCK Hospitality Public, you can compare the effects of market volatilities on Advanced Information and JCK Hospitality 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 Advanced Information with a short position of JCK Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Information and JCK Hospitality.

Diversification Opportunities for Advanced Information and JCK Hospitality

-0.17

Correlation Coefficient

Advanced Information  JCK Hospitality

Good diversification

The 3 months correlation between Advanced and JCK is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and JCK Hospitality Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCK Hospitality Public and Advanced 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 Advanced Information Technology are associated (or correlated) with JCK Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCK Hospitality Public has no effect on the direction of Advanced Information i.e., Advanced Information and JCK Hospitality go up and down completely randomly.

Pair Corralation between Advanced Information and JCK Hospitality

Assuming the 90 days trading horizon Advanced Information is expected to generate 2.77 times less return on investment than JCK Hospitality. But when comparing it to its historical volatility, Advanced Information Technology is 8.03 times less risky than JCK Hospitality. It trades about 0.13 of its potential returns per unit of risk. JCK Hospitality Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  45.00  in JCK Hospitality Public on December 20, 2024 and sell it today you would lose (10.00) from holding JCK Hospitality Public or give up 22.22% of portfolio value over 90 days.

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

Advanced Information Technolog  vs.  JCK Hospitality Public

Advanced Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Information Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Advanced Information disclosed solid returns over the last few months and may actually be approaching a breakup point.

JCK Hospitality Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JCK Hospitality Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, JCK Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Information and JCK Hospitality

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

The idea behind Advanced Information Technology and JCK Hospitality Public 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.