Correlation Between PetMed Express and China Jo

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

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

Diversification Opportunities for PetMed Express and China Jo

0.81

Correlation Coefficient

PetMed Express  China Jo

Very poor diversification

The 3 months correlation between PetMed and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding PetMed Express and China Jo Jo Drugstores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Jo Jo and PetMed Express 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 PetMed Express are associated (or correlated) with China Jo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Jo Jo has no effect on the direction of PetMed Express i.e., PetMed Express and China Jo go up and down completely randomly.

Pair Corralation between PetMed Express and China Jo

Given the investment horizon of 90 days PetMed Express is expected to generate 0.64 times more return on investment than China Jo. However, PetMed Express is 1.57 times less risky than China Jo. It trades about -0.05 of its potential returns per unit of risk. China Jo Jo Drugstores is currently generating about -0.05 per unit of risk. If you would invest  500.00  in PetMed Express on December 28, 2024 and sell it today you would lose (76.00) from holding PetMed Express or give up 15.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	73.33%
Values	Daily Returns

PetMed Express  vs.  China Jo Jo Drugstores

PetMed Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days PetMed Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

China Jo Jo

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Jo Jo Drugstores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with PetMed Express and China Jo

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

The idea behind PetMed Express and China Jo Jo Drugstores 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.