Correlation Between China Jo and Caf Serendipity

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

By analyzing existing cross correlation between China Jo Jo Drugstores and Caf Serendipity Holdings, you can compare the effects of market volatilities on China Jo and Caf Serendipity 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 China Jo with a short position of Caf Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Jo and Caf Serendipity.

Diversification Opportunities for China Jo and Caf Serendipity

-0.28

Correlation Coefficient

China Jo  Caf Serendipity

Very good diversification

The 3 months correlation between China and Caf is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and China Jo 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 China Jo Jo Drugstores are associated (or correlated) with Caf Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of China Jo i.e., China Jo and Caf Serendipity go up and down completely randomly.

Pair Corralation between China Jo and Caf Serendipity

If you would invest  172.00  in China Jo Jo Drugstores on October 20, 2024 and sell it today you would earn a total of  3.00  from holding China Jo Jo Drugstores or generate 1.74% return on investment over 90 days.

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

China Jo Jo Drugstores  vs.  Caf Serendipity Holdings

China Jo Jo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Jo Jo Drugstores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, China Jo is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Caf Serendipity Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caf Serendipity Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Caf Serendipity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Jo and Caf Serendipity

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

The idea behind China Jo Jo Drugstores and Caf Serendipity Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.