Correlation Between JPMorgan Japanese and PureTech Health

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

By analyzing existing cross correlation between JPMorgan Japanese Investment and PureTech Health plc, you can compare the effects of market volatilities on JPMorgan Japanese and PureTech Health 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 JPMorgan Japanese with a short position of PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Japanese and PureTech Health.

Diversification Opportunities for JPMorgan Japanese and PureTech Health

0.33

Correlation Coefficient

JPMorgan Japanese  PureTech Health

Weak diversification

The 3 months correlation between JPMorgan and PureTech is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Japanese Investment and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc and JPMorgan Japanese 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 JPMorgan Japanese Investment are associated (or correlated) with PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of JPMorgan Japanese i.e., JPMorgan Japanese and PureTech Health go up and down completely randomly.

Pair Corralation between JPMorgan Japanese and PureTech Health

Assuming the 90 days trading horizon JPMorgan Japanese Investment is expected to generate 0.32 times more return on investment than PureTech Health. However, JPMorgan Japanese Investment is 3.14 times less risky than PureTech Health. It trades about -0.06 of its potential returns per unit of risk. PureTech Health plc is currently generating about -0.35 per unit of risk. If you would invest  56,611  in JPMorgan Japanese Investment on October 9, 2024 and sell it today you would lose (511.00) from holding JPMorgan Japanese Investment or give up 0.9% of portfolio value over 90 days.

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

JPMorgan Japanese Investment  vs.  PureTech Health plc

JPMorgan Japanese

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Japanese Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, JPMorgan Japanese is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

PureTech Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PureTech Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JPMorgan Japanese and PureTech Health

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

The idea behind JPMorgan Japanese Investment and PureTech Health plc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.