Correlation Between Index International and Jakpaisan Estate

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

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

Diversification Opportunities for Index International and Jakpaisan Estate

0.23

Correlation Coefficient

Index International  Jakpaisan Estate

Modest diversification

The 3 months correlation between Index and Jakpaisan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Index International Group and Jakpaisan Estate Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakpaisan Estate Public and Index International 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 Index International Group are associated (or correlated) with Jakpaisan Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakpaisan Estate Public has no effect on the direction of Index International i.e., Index International and Jakpaisan Estate go up and down completely randomly.

Pair Corralation between Index International and Jakpaisan Estate

Assuming the 90 days trading horizon Index International Group is expected to generate 0.73 times more return on investment than Jakpaisan Estate. However, Index International Group is 1.37 times less risky than Jakpaisan Estate. It trades about 0.18 of its potential returns per unit of risk. Jakpaisan Estate Public is currently generating about 0.09 per unit of risk. If you would invest  71.00  in Index International Group on December 5, 2024 and sell it today you would earn a total of  12.00  from holding Index International Group or generate 16.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Index International Group  vs.  Jakpaisan Estate Public

Index International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Index International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Index International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Jakpaisan Estate Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jakpaisan Estate Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Jakpaisan Estate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Index International and Jakpaisan Estate

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

The idea behind Index International Group and Jakpaisan Estate 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.