Correlation Between Malaga Financial and Jerash Holdings

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

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

Diversification Opportunities for Malaga Financial and Jerash Holdings

0.11

Correlation Coefficient

Malaga Financial  Jerash Holdings

Average diversification

The 3 months correlation between Malaga and Jerash is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Malaga Financial and Jerash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerash Holdings and Malaga Financial 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 Malaga Financial are associated (or correlated) with Jerash Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerash Holdings has no effect on the direction of Malaga Financial i.e., Malaga Financial and Jerash Holdings go up and down completely randomly.

Pair Corralation between Malaga Financial and Jerash Holdings

Given the investment horizon of 90 days Malaga Financial is expected to under-perform the Jerash Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Malaga Financial is 1.25 times less risky than Jerash Holdings. The pink sheet trades about -0.39 of its potential returns per unit of risk. The Jerash Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  337.00  in Jerash Holdings on October 26, 2024 and sell it today you would earn a total of  12.00  from holding Jerash Holdings or generate 3.56% return on investment over 90 days.

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

Malaga Financial  vs.  Jerash Holdings

Malaga Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Jerash Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Jerash Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Malaga Financial and Jerash Holdings

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

The idea behind Malaga Financial and Jerash Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.