Correlation Between JGC Corp and Digital Locations

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Can any of the company-specific risk be diversified away by investing in both JGC Corp and Digital Locations 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 JGC Corp and Digital Locations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JGC Corp and Digital Locations, you can compare the effects of market volatilities on JGC Corp and Digital Locations 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 JGC Corp with a short position of Digital Locations. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGC Corp and Digital Locations.

Diversification Opportunities for JGC Corp and Digital Locations

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between JGC and Digital is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding JGC Corp and Digital Locations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Locations and JGC Corp 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 JGC Corp are associated (or correlated) with Digital Locations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Locations has no effect on the direction of JGC Corp i.e., JGC Corp and Digital Locations go up and down completely randomly.

Pair Corralation between JGC Corp and Digital Locations

Assuming the 90 days horizon JGC Corp is expected to under-perform the Digital Locations. But the pink sheet apears to be less risky and, when comparing its historical volatility, JGC Corp is 5.08 times less risky than Digital Locations. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Digital Locations is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Digital Locations on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Digital Locations or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

JGC Corp  vs.  Digital Locations

 Performance 
       Timeline  
JGC Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JGC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Digital Locations 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Digital Locations are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Digital Locations exhibited solid returns over the last few months and may actually be approaching a breakup point.

JGC Corp and Digital Locations Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JGC Corp and Digital Locations

The main advantage of trading using opposite JGC Corp and Digital Locations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JGC Corp position performs unexpectedly, Digital Locations 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 Digital Locations will offset losses from the drop in Digital Locations' long position.
The idea behind JGC Corp and Digital Locations 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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