Correlation Between DOHOME and Jasmine International

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

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

Diversification Opportunities for DOHOME and Jasmine International

0.82

Correlation Coefficient

DOHOME  Jasmine International

Very poor diversification

The 3 months correlation between DOHOME and Jasmine is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding DOHOME and Jasmine International Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasmine International and DOHOME 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 DOHOME are associated (or correlated) with Jasmine International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasmine International has no effect on the direction of DOHOME i.e., DOHOME and Jasmine International go up and down completely randomly.

Pair Corralation between DOHOME and Jasmine International

Assuming the 90 days trading horizon DOHOME is expected to generate 0.74 times more return on investment than Jasmine International. However, DOHOME is 1.35 times less risky than Jasmine International. It trades about 0.01 of its potential returns per unit of risk. Jasmine International Public is currently generating about -0.03 per unit of risk. If you would invest  1,010  in DOHOME on September 3, 2024 and sell it today you would earn a total of  0.00  from holding DOHOME or generate 0.0% return on investment over 90 days.

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

DOHOME  vs.  Jasmine International Public

DOHOME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOHOME has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, DOHOME is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Jasmine International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jasmine International Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Jasmine International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DOHOME and Jasmine International

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

The idea behind DOHOME and Jasmine International Public 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.