Correlation Between Asahi Songwon and JTL Industries

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

By analyzing existing cross correlation between Asahi Songwon Colors and JTL Industries, you can compare the effects of market volatilities on Asahi Songwon and JTL Industries 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 Asahi Songwon with a short position of JTL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Songwon and JTL Industries.

Diversification Opportunities for Asahi Songwon and JTL Industries

0.68

Correlation Coefficient

Asahi Songwon  JTL Industries

Poor diversification

The 3 months correlation between Asahi and JTL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Songwon Colors and JTL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JTL Industries and Asahi Songwon 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 Asahi Songwon Colors are associated (or correlated) with JTL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JTL Industries has no effect on the direction of Asahi Songwon i.e., Asahi Songwon and JTL Industries go up and down completely randomly.

Pair Corralation between Asahi Songwon and JTL Industries

Assuming the 90 days trading horizon Asahi Songwon Colors is expected to under-perform the JTL Industries. In addition to that, Asahi Songwon is 1.06 times more volatile than JTL Industries. It trades about -0.13 of its total potential returns per unit of risk. JTL Industries is currently generating about 0.01 per unit of volatility. If you would invest  10,746  in JTL Industries on October 9, 2024 and sell it today you would earn a total of  42.00  from holding JTL Industries or generate 0.39% return on investment over 90 days.

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

Asahi Songwon Colors  vs.  JTL Industries

Asahi Songwon Colors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Songwon Colors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

JTL Industries

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JTL Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, JTL Industries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asahi Songwon and JTL Industries

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

The idea behind Asahi Songwon Colors and JTL Industries 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 Global Correlations module to find global opportunities by holding instruments from different markets.