Correlation Between Pato Chemical and Jack Chia

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

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

Diversification Opportunities for Pato Chemical and Jack Chia

0.25

Correlation Coefficient

Pato Chemical  Jack Chia

Modest diversification

The 3 months correlation between Pato and Jack is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pato Chemical Industry and Jack Chia Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Chia Industries and Pato Chemical 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 Pato Chemical Industry are associated (or correlated) with Jack Chia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Chia Industries has no effect on the direction of Pato Chemical i.e., Pato Chemical and Jack Chia go up and down completely randomly.

Pair Corralation between Pato Chemical and Jack Chia

Assuming the 90 days trading horizon Pato Chemical Industry is expected to under-perform the Jack Chia. In addition to that, Pato Chemical is 1.14 times more volatile than Jack Chia Industries. It trades about -0.32 of its total potential returns per unit of risk. Jack Chia Industries is currently generating about -0.03 per unit of volatility. If you would invest  8,100  in Jack Chia Industries on September 15, 2024 and sell it today you would lose (25.00) from holding Jack Chia Industries or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Pato Chemical Industry  vs.  Jack Chia Industries

Pato Chemical Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pato Chemical Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Jack Chia Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jack Chia Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Jack Chia 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 Pato Chemical and Jack Chia

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

The idea behind Pato Chemical Industry and Jack Chia Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..