Correlation Between JPX Global and Dear Cashmere

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

By analyzing existing cross correlation between JPX Global and Dear Cashmere Holding, you can compare the effects of market volatilities on JPX Global and Dear Cashmere 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 JPX Global with a short position of Dear Cashmere. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPX Global and Dear Cashmere.

Diversification Opportunities for JPX Global and Dear Cashmere

0.03

Correlation Coefficient

JPX Global  Dear Cashmere

Significant diversification

The 3 months correlation between JPX and Dear is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding JPX Global and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding and JPX Global 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 JPX Global are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of JPX Global i.e., JPX Global and Dear Cashmere go up and down completely randomly.

Pair Corralation between JPX Global and Dear Cashmere

Given the investment horizon of 90 days JPX Global is expected to generate 0.89 times more return on investment than Dear Cashmere. However, JPX Global is 1.12 times less risky than Dear Cashmere. It trades about 0.07 of its potential returns per unit of risk. Dear Cashmere Holding is currently generating about 0.05 per unit of risk. If you would invest  0.20  in JPX Global on October 24, 2024 and sell it today you would lose (0.20) from holding JPX Global or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

JPX Global  vs.  Dear Cashmere Holding

JPX Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPX Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and 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.

Dear Cashmere Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with JPX Global and Dear Cashmere

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

The idea behind JPX Global and Dear Cashmere Holding 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.