Correlation Between Pennant and JD Health

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

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

Diversification Opportunities for Pennant and JD Health

-0.69

Correlation Coefficient

Pennant  JD Health

Excellent diversification

The 3 months correlation between Pennant and JDHIY is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pennant Group and JD Health International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Health International and Pennant 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 Pennant Group are associated (or correlated) with JD Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Health International has no effect on the direction of Pennant i.e., Pennant and JD Health go up and down completely randomly.

Pair Corralation between Pennant and JD Health

Given the investment horizon of 90 days Pennant Group is expected to under-perform the JD Health. In addition to that, Pennant is 1.38 times more volatile than JD Health International. It trades about -0.01 of its total potential returns per unit of risk. JD Health International is currently generating about 0.1 per unit of volatility. If you would invest  320.00  in JD Health International on September 21, 2024 and sell it today you would earn a total of  61.00  from holding JD Health International or generate 19.06% return on investment over 90 days.

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

Pennant Group  vs.  JD Health International

Pennant Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

JD Health International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Health International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, JD Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pennant and JD Health

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

The idea behind Pennant Group and JD Health International 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.