Correlation Between Jadeart and Coastal Capital

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

By analyzing existing cross correlation between Jadeart Group and Coastal Capital Acq, you can compare the effects of market volatilities on Jadeart and Coastal Capital 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 Jadeart with a short position of Coastal Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jadeart and Coastal Capital.

Diversification Opportunities for Jadeart and Coastal Capital

0.51

Correlation Coefficient

Jadeart  Coastal Capital

Very weak diversification

The 3 months correlation between Jadeart and Coastal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Jadeart Group and Coastal Capital Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Capital Acq and Jadeart 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 Jadeart Group are associated (or correlated) with Coastal Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Capital Acq has no effect on the direction of Jadeart i.e., Jadeart and Coastal Capital go up and down completely randomly.

Pair Corralation between Jadeart and Coastal Capital

Given the investment horizon of 90 days Jadeart is expected to generate 2.48 times less return on investment than Coastal Capital. But when comparing it to its historical volatility, Jadeart Group is 1.39 times less risky than Coastal Capital. It trades about 0.07 of its potential returns per unit of risk. Coastal Capital Acq is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Coastal Capital Acq on September 7, 2024 and sell it today you would earn a total of  0.01  from holding Coastal Capital Acq or generate 10.0% return on investment over 90 days.

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

Jadeart Group  vs.  Coastal Capital Acq

Jadeart Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jadeart Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Jadeart sustained solid returns over the last few months and may actually be approaching a breakup point.

Coastal Capital Acq

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Capital Acq are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Coastal Capital revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jadeart and Coastal Capital

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

The idea behind Jadeart Group and Coastal Capital Acq 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.