Correlation Between JS Global and KOT Addu

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

By analyzing existing cross correlation between JS Global Banking and KOT Addu Power, you can compare the effects of market volatilities on JS Global and KOT Addu 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 JS Global with a short position of KOT Addu. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Global and KOT Addu.

Diversification Opportunities for JS Global and KOT Addu

0.45

Correlation Coefficient

JS Global  KOT Addu

Very weak diversification

The 3 months correlation between JSGBETF and KOT is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JS Global Banking and KOT Addu Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOT Addu Power and JS 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 JS Global Banking are associated (or correlated) with KOT Addu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOT Addu Power has no effect on the direction of JS Global i.e., JS Global and KOT Addu go up and down completely randomly.

Pair Corralation between JS Global and KOT Addu

Assuming the 90 days trading horizon JS Global Banking is expected to under-perform the KOT Addu. In addition to that, JS Global is 2.59 times more volatile than KOT Addu Power. It trades about -0.05 of its total potential returns per unit of risk. KOT Addu Power is currently generating about 0.06 per unit of volatility. If you would invest  3,612  in KOT Addu Power on December 4, 2024 and sell it today you would earn a total of  158.00  from holding KOT Addu Power or generate 4.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

JS Global Banking  vs.  KOT Addu Power

JS Global Banking

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Global Banking has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

KOT Addu Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KOT Addu Power are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, KOT Addu is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with JS Global and KOT Addu

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

The idea behind JS Global Banking and KOT Addu Power 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.