Correlation Between First Watch and JIN MEDICAL

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

By analyzing existing cross correlation between First Watch Restaurant and JIN MEDICAL INTERNATIONAL, you can compare the effects of market volatilities on First Watch and JIN MEDICAL 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 First Watch with a short position of JIN MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and JIN MEDICAL.

Diversification Opportunities for First Watch and JIN MEDICAL

-0.22

Correlation Coefficient

First Watch  JIN MEDICAL

Very good diversification

The 3 months correlation between First and JIN is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and JIN MEDICAL INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JIN MEDICAL INTERNATIONAL and First Watch 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 First Watch Restaurant are associated (or correlated) with JIN MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JIN MEDICAL INTERNATIONAL has no effect on the direction of First Watch i.e., First Watch and JIN MEDICAL go up and down completely randomly.

Pair Corralation between First Watch and JIN MEDICAL

Given the investment horizon of 90 days First Watch Restaurant is expected to under-perform the JIN MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, First Watch Restaurant is 2.76 times less risky than JIN MEDICAL. The stock trades about -0.06 of its potential returns per unit of risk. The JIN MEDICAL INTERNATIONAL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  80.00  in JIN MEDICAL INTERNATIONAL on December 18, 2024 and sell it today you would earn a total of  9.00  from holding JIN MEDICAL INTERNATIONAL or generate 11.25% return on investment over 90 days.

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

First Watch Restaurant  vs.  JIN MEDICAL INTERNATIONAL

First Watch Restaurant

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Watch Restaurant has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

JIN MEDICAL INTERNATIONAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JIN MEDICAL INTERNATIONAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, JIN MEDICAL disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Watch and JIN MEDICAL

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

The idea behind First Watch Restaurant and JIN MEDICAL INTERNATIONAL 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .