Correlation Between Airports and JMT Network

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

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

Diversification Opportunities for Airports and JMT Network

-0.05

Correlation Coefficient

Airports  JMT Network

Good diversification

The 3 months correlation between Airports and JMT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand 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 Airports 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 Airports of Thailand 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 Airports i.e., Airports and JMT Network go up and down completely randomly.

Pair Corralation between Airports and JMT Network

Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the JMT Network. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 3.33 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 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,760  in JMT Network Services on September 5, 2024 and sell it today you would earn a total of  230.00  from holding JMT Network Services or generate 13.07% return on investment over 90 days.

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

Airports of Thailand  vs.  JMT Network Services

Airports of Thailand

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Airports of Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Airports is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

JMT Network Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JMT Network Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, JMT Network disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Airports and JMT Network

The main advantage of trading using opposite Airports and JMT Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports 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 Airports of Thailand 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.