Correlation Between SGF Capital and JMT Network

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

By analyzing existing cross correlation between SGF Capital Public and JMT Network Services, you can compare the effects of market volatilities on SGF Capital and JMT Network 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 SGF Capital with a short position of JMT Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGF Capital and JMT Network.

Diversification Opportunities for SGF Capital and JMT Network

0.03

Correlation Coefficient

SGF Capital  JMT Network

Significant diversification

The 3 months correlation between SGF and JMT is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SGF Capital Public and JMT Network Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JMT Network Services and SGF Capital 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 SGF Capital Public are associated (or correlated) with JMT Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JMT Network Services has no effect on the direction of SGF Capital i.e., SGF Capital and JMT Network go up and down completely randomly.

Pair Corralation between SGF Capital and JMT Network

Assuming the 90 days trading horizon SGF Capital Public is expected to generate 20.18 times more return on investment than JMT Network. However, SGF Capital is 20.18 times more volatile than JMT Network Services. It trades about 0.08 of its potential returns per unit of risk. JMT Network Services is currently generating about 0.08 per unit of risk. If you would invest  29.00  in SGF Capital Public on September 29, 2024 and sell it today you would lose (5.00) from holding SGF Capital Public or give up 17.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

SGF Capital Public  vs.  JMT Network Services

SGF Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGF Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

JMT Network Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JMT Network Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, JMT Network 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 SGF Capital and JMT Network

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

The idea behind SGF Capital Public and JMT Network Services 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.