Correlation Between JS Investments and Pak Datacom

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

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

Diversification Opportunities for JS Investments and Pak Datacom

0.3

Correlation Coefficient

JS Investments  Pak Datacom

Weak diversification

The 3 months correlation between JSIL and Pak is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Pak Datacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pak Datacom and JS Investments 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 Investments are associated (or correlated) with Pak Datacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pak Datacom has no effect on the direction of JS Investments i.e., JS Investments and Pak Datacom go up and down completely randomly.

Pair Corralation between JS Investments and Pak Datacom

Assuming the 90 days trading horizon JS Investments is expected to generate 1.21 times less return on investment than Pak Datacom. In addition to that, JS Investments is 1.12 times more volatile than Pak Datacom. It trades about 0.11 of its total potential returns per unit of risk. Pak Datacom is currently generating about 0.15 per unit of volatility. If you would invest  7,136  in Pak Datacom on September 17, 2024 and sell it today you would earn a total of  673.00  from holding Pak Datacom or generate 9.43% return on investment over 90 days.

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

JS Investments  vs.  Pak Datacom

JS Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pak Datacom

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pak Datacom are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pak Datacom is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JS Investments and Pak Datacom

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

The idea behind JS Investments and Pak Datacom 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.