Correlation Between Majic Wheels and JPX Global

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

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

Diversification Opportunities for Majic Wheels and JPX Global

0.0

Correlation Coefficient

Majic Wheels  JPX Global

Pay attention - limited upside

The 3 months correlation between Majic and JPX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Majic Wheels Corp and JPX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPX Global and Majic Wheels 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 Majic Wheels Corp are associated (or correlated) with JPX Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPX Global has no effect on the direction of Majic Wheels i.e., Majic Wheels and JPX Global go up and down completely randomly.

Pair Corralation between Majic Wheels and JPX Global

Given the investment horizon of 90 days Majic Wheels Corp is expected to generate 1.27 times more return on investment than JPX Global. However, Majic Wheels is 1.27 times more volatile than JPX Global. It trades about 0.07 of its potential returns per unit of risk. JPX Global is currently generating about 0.08 per unit of risk. If you would invest  0.70  in Majic Wheels Corp on December 1, 2024 and sell it today you would lose (0.69) from holding Majic Wheels Corp or give up 98.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Majic Wheels Corp  vs.  JPX Global

Majic Wheels Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Majic Wheels Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Majic Wheels disclosed solid returns over the last few months and may actually be approaching a breakup point.

JPX Global

Risk-Adjusted Performance

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 fairly strong technical and fundamental indicators, JPX Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Majic Wheels and JPX Global

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

The idea behind Majic Wheels Corp and JPX Global 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.