Correlation Between Pennant and JRSIS Health

Can any of the company-specific risk be diversified away by investing in both Pennant and JRSIS 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 JRSIS 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 JRSIS Health Care, you can compare the effects of market volatilities on Pennant and JRSIS 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 JRSIS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pennant and JRSIS Health.

Diversification Opportunities for Pennant and JRSIS Health

0.7

Correlation Coefficient

Pennant  JRSIS Health

Poor diversification

The 3 months correlation between Pennant and JRSIS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pennant Group and JRSIS Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JRSIS Health Care 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 JRSIS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JRSIS Health Care has no effect on the direction of Pennant i.e., Pennant and JRSIS Health go up and down completely randomly.

Pair Corralation between Pennant and JRSIS Health

Given the investment horizon of 90 days Pennant Group is expected to under-perform the JRSIS Health. But the stock apears to be less risky and, when comparing its historical volatility, Pennant Group is 10.0 times less risky than JRSIS Health. The stock trades about -0.29 of its potential returns per unit of risk. The JRSIS Health Care is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12.00  in JRSIS Health Care on September 21, 2024 and sell it today you would earn a total of  3.00  from holding JRSIS Health Care or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Pennant Group  vs.  JRSIS Health Care

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.

JRSIS Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JRSIS Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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.

Pair Trading with Pennant and JRSIS Health

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

The idea behind Pennant Group and JRSIS Health Care 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..