Correlation Between Jadeart and CLST Holdings

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

By analyzing existing cross correlation between Jadeart Group and CLST Holdings, you can compare the effects of market volatilities on Jadeart and CLST Holdings 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 CLST Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jadeart and CLST Holdings.

Diversification Opportunities for Jadeart and CLST Holdings

0.55

Correlation Coefficient

Jadeart  CLST Holdings

Very weak diversification

The 3 months correlation between Jadeart and CLST is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jadeart Group and CLST Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLST Holdings 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 CLST Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLST Holdings has no effect on the direction of Jadeart i.e., Jadeart and CLST Holdings go up and down completely randomly.

Pair Corralation between Jadeart and CLST Holdings

Given the investment horizon of 90 days Jadeart Group is expected to generate 1.28 times more return on investment than CLST Holdings. However, Jadeart is 1.28 times more volatile than CLST Holdings. It trades about 0.07 of its potential returns per unit of risk. CLST Holdings is currently generating about 0.01 per unit of risk. If you would invest  0.46  in Jadeart Group on September 8, 2024 and sell it today you would lose (0.12) from holding Jadeart Group or give up 26.09% of portfolio value over 90 days.

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

Jadeart Group  vs.  CLST Holdings

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.

CLST Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLST Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly uncertain technical indicators, CLST Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jadeart and CLST Holdings

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

The idea behind Jadeart Group and CLST Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.