Correlation Between Jade Leader and Morien Resources

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

By analyzing existing cross correlation between Jade Leader Corp and Morien Resources Corp, you can compare the effects of market volatilities on Jade Leader and Morien Resources 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 Jade Leader with a short position of Morien Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jade Leader and Morien Resources.

Diversification Opportunities for Jade Leader and Morien Resources

0.36

Correlation Coefficient

Jade Leader  Morien Resources

Weak diversification

The 3 months correlation between Jade and Morien is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Jade Leader Corp and Morien Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morien Resources Corp and Jade Leader 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 Jade Leader Corp are associated (or correlated) with Morien Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morien Resources Corp has no effect on the direction of Jade Leader i.e., Jade Leader and Morien Resources go up and down completely randomly.

Pair Corralation between Jade Leader and Morien Resources

Assuming the 90 days trading horizon Jade Leader Corp is expected to generate 5.37 times more return on investment than Morien Resources. However, Jade Leader is 5.37 times more volatile than Morien Resources Corp. It trades about 0.13 of its potential returns per unit of risk. Morien Resources Corp is currently generating about 0.06 per unit of risk. If you would invest  2.00  in Jade Leader Corp on December 29, 2024 and sell it today you would earn a total of  2.00  from holding Jade Leader Corp or generate 100.0% return on investment over 90 days.

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

Jade Leader Corp  vs.  Morien Resources Corp

Jade Leader Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jade Leader Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Jade Leader showed solid returns over the last few months and may actually be approaching a breakup point.

Morien Resources Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Jade Leader and Morien Resources

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

The idea behind Jade Leader Corp and Morien Resources Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.