Correlation Between CLST Holdings and Jadeart
Can any of the company-specific risk be diversified away by investing in both CLST Holdings and Jadeart 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 CLST Holdings and Jadeart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CLST Holdings and Jadeart Group, you can compare the effects of market volatilities on CLST Holdings and Jadeart 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 CLST Holdings with a short position of Jadeart. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLST Holdings and Jadeart.
Diversification Opportunities for CLST Holdings and Jadeart
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CLST and Jadeart is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CLST Holdings and Jadeart Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jadeart Group and CLST Holdings 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 CLST Holdings are associated (or correlated) with Jadeart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jadeart Group has no effect on the direction of CLST Holdings i.e., CLST Holdings and Jadeart go up and down completely randomly.
Pair Corralation between CLST Holdings and Jadeart
Given the investment horizon of 90 days CLST Holdings is expected to generate 8.28 times less return on investment than Jadeart. But when comparing it to its historical volatility, CLST Holdings is 1.28 times less risky than Jadeart. It trades about 0.01 of its potential returns per unit of risk. Jadeart Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.47 in Jadeart Group on September 6, 2024 and sell it today you would lose (0.13) from holding Jadeart Group or give up 27.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CLST Holdings vs. Jadeart Group
Performance |
Timeline |
CLST Holdings |
Jadeart Group |
CLST Holdings and Jadeart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CLST Holdings and Jadeart
The main advantage of trading using opposite CLST Holdings and Jadeart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLST Holdings position performs unexpectedly, Jadeart 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 Jadeart will offset losses from the drop in Jadeart's long position.CLST Holdings vs. United Fire Group | CLST Holdings vs. Old Republic International | CLST Holdings vs. Boston Omaha Corp | CLST Holdings vs. WPP PLC ADR |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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