Correlation Between Premier Technology and JCK Hospitality

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

By analyzing existing cross correlation between Premier Technology Public and JCK Hospitality Public, you can compare the effects of market volatilities on Premier Technology and JCK Hospitality 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 Premier Technology with a short position of JCK Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Technology and JCK Hospitality.

Diversification Opportunities for Premier Technology and JCK Hospitality

-0.43

Correlation Coefficient

Premier Technology  JCK Hospitality

Very good diversification

The 3 months correlation between Premier and JCK is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Premier Technology Public and JCK Hospitality Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCK Hospitality Public and Premier Technology 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 Premier Technology Public are associated (or correlated) with JCK Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCK Hospitality Public has no effect on the direction of Premier Technology i.e., Premier Technology and JCK Hospitality go up and down completely randomly.

Pair Corralation between Premier Technology and JCK Hospitality

Assuming the 90 days horizon Premier Technology is expected to generate 1694.44 times less return on investment than JCK Hospitality. But when comparing it to its historical volatility, Premier Technology Public is 232.74 times less risky than JCK Hospitality. It trades about 0.03 of its potential returns per unit of risk. JCK Hospitality Public is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2.00  in JCK Hospitality Public on October 12, 2024 and sell it today you would earn a total of  28.00  from holding JCK Hospitality Public or generate 1400.0% return on investment over 90 days.

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

Premier Technology Public  vs.  JCK Hospitality Public

Premier Technology Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier Technology Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Premier Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

JCK Hospitality Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JCK Hospitality Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, JCK Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premier Technology and JCK Hospitality

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

The idea behind Premier Technology Public and JCK Hospitality Public 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.