Correlation Between China Jo and Powell Max

Can any of the company-specific risk be diversified away by investing in both China Jo and Powell Max 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 Powell Max 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 Powell Max Limited, you can compare the effects of market volatilities on China Jo and Powell Max 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 Powell Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Jo and Powell Max.

Diversification Opportunities for China Jo and Powell Max

0.1

Correlation Coefficient

China Jo  Powell Max

Average diversification

The 3 months correlation between China and Powell is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and Powell Max Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Max Limited 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 Powell Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Max Limited has no effect on the direction of China Jo i.e., China Jo and Powell Max go up and down completely randomly.

Pair Corralation between China Jo and Powell Max

Given the investment horizon of 90 days China Jo Jo Drugstores is expected to generate 1.29 times more return on investment than Powell Max. However, China Jo is 1.29 times more volatile than Powell Max Limited. It trades about -0.03 of its potential returns per unit of risk. Powell Max Limited is currently generating about -0.06 per unit of risk. If you would invest  8,580  in China Jo Jo Drugstores on September 21, 2024 and sell it today you would lose (8,404) from holding China Jo Jo Drugstores or give up 97.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	15.32%
Values	Daily Returns

China Jo Jo Drugstores  vs.  Powell Max Limited

China Jo Jo

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Jo Jo Drugstores are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, China Jo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Powell Max Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powell Max Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with China Jo and Powell Max

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

The idea behind China Jo Jo Drugstores and Powell Max Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.