Correlation Between Jupiter and SWTH

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

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

Diversification Opportunities for Jupiter and SWTH

-0.4

Correlation Coefficient

Jupiter  SWTH

Very good diversification

The 3 months correlation between Jupiter and SWTH is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jupiter and SWTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWTH and Jupiter 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 Jupiter are associated (or correlated) with SWTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWTH has no effect on the direction of Jupiter i.e., Jupiter and SWTH go up and down completely randomly.

Pair Corralation between Jupiter and SWTH

Assuming the 90 days trading horizon Jupiter is expected to generate 6.86 times less return on investment than SWTH. But when comparing it to its historical volatility, Jupiter is 9.66 times less risky than SWTH. It trades about 0.15 of its potential returns per unit of risk. SWTH is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.38  in SWTH on August 30, 2024 and sell it today you would earn a total of  0.71  from holding SWTH or generate 185.56% return on investment over 90 days.

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

Jupiter  vs.  SWTH

Jupiter

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Jupiter exhibited solid returns over the last few months and may actually be approaching a breakup point.

SWTH

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SWTH are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SWTH exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jupiter and SWTH

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

The idea behind Jupiter and SWTH 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.