Correlation Between Jat Holdings and Trans Asia

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

By analyzing existing cross correlation between Jat Holdings PLC and Trans Asia Hotels, you can compare the effects of market volatilities on Jat Holdings and Trans Asia 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 Jat Holdings with a short position of Trans Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jat Holdings and Trans Asia.

Diversification Opportunities for Jat Holdings and Trans Asia

0.15

Correlation Coefficient

Jat Holdings  Trans Asia

Average diversification

The 3 months correlation between Jat and Trans is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Jat Holdings PLC and Trans Asia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trans Asia Hotels and Jat Holdings 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 Jat Holdings PLC are associated (or correlated) with Trans Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trans Asia Hotels has no effect on the direction of Jat Holdings i.e., Jat Holdings and Trans Asia go up and down completely randomly.

Pair Corralation between Jat Holdings and Trans Asia

Assuming the 90 days trading horizon Jat Holdings PLC is expected to generate 0.95 times more return on investment than Trans Asia. However, Jat Holdings PLC is 1.05 times less risky than Trans Asia. It trades about 0.04 of its potential returns per unit of risk. Trans Asia Hotels is currently generating about -0.07 per unit of risk. If you would invest  2,600  in Jat Holdings PLC on December 25, 2024 and sell it today you would earn a total of  70.00  from holding Jat Holdings PLC or generate 2.69% return on investment over 90 days.

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

Jat Holdings PLC  vs.  Trans Asia Hotels

Jat Holdings PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jat Holdings PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jat Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Trans Asia Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trans Asia Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jat Holdings and Trans Asia

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

The idea behind Jat Holdings PLC and Trans Asia Hotels 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..