Correlation Between Astar and JPM Global

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

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

Diversification Opportunities for Astar and JPM Global

0.66

Correlation Coefficient

Astar  JPM Global

Poor diversification

The 3 months correlation between Astar and JPM is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Astar and JPM Global Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Global Research and Astar 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 Astar are associated (or correlated) with JPM Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Global Research has no effect on the direction of Astar i.e., Astar and JPM Global go up and down completely randomly.

Pair Corralation between Astar and JPM Global

Assuming the 90 days trading horizon Astar is expected to under-perform the JPM Global. In addition to that, Astar is 10.02 times more volatile than JPM Global Research. It trades about -0.01 of its total potential returns per unit of risk. JPM Global Research is currently generating about -0.03 per unit of volatility. If you would invest  253,750  in JPM Global Research on October 9, 2024 and sell it today you would lose (925.00) from holding JPM Global Research or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Astar  vs.  JPM Global Research

Astar

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPM Global Research

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Global Research are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPM Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Astar and JPM Global

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

The idea behind Astar and JPM Global Research 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.