Correlation Between Jadeart and Silverton Adventures

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

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

Diversification Opportunities for Jadeart and Silverton Adventures

-0.75

Correlation Coefficient

Jadeart  Silverton Adventures

Pay attention - limited upside

The 3 months correlation between Jadeart and Silverton is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Jadeart Group and Silverton Adventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silverton Adventures 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 Silverton Adventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silverton Adventures has no effect on the direction of Jadeart i.e., Jadeart and Silverton Adventures go up and down completely randomly.

Pair Corralation between Jadeart and Silverton Adventures

Given the investment horizon of 90 days Jadeart Group is expected to generate 1.64 times more return on investment than Silverton Adventures. However, Jadeart is 1.64 times more volatile than Silverton Adventures. It trades about 0.07 of its potential returns per unit of risk. Silverton Adventures is currently generating about 0.06 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Jadeart Group  vs.  Silverton Adventures

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.

Silverton Adventures

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silverton Adventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Silverton Adventures exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jadeart and Silverton Adventures

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

The idea behind Jadeart Group and Silverton Adventures 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.