Correlation Between Texas Gulf and JPX Global

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

By analyzing existing cross correlation between Texas Gulf Energy and JPX Global, you can compare the effects of market volatilities on Texas Gulf and JPX Global 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 Texas Gulf with a short position of JPX Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Gulf and JPX Global.

Diversification Opportunities for Texas Gulf and JPX Global

0.37

Correlation Coefficient

Texas Gulf  JPX Global

Weak diversification

The 3 months correlation between Texas and JPX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Texas Gulf Energy and JPX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPX Global and Texas Gulf 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 Texas Gulf Energy are associated (or correlated) with JPX Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPX Global has no effect on the direction of Texas Gulf i.e., Texas Gulf and JPX Global go up and down completely randomly.

Pair Corralation between Texas Gulf and JPX Global

Given the investment horizon of 90 days Texas Gulf is expected to generate 34.42 times less return on investment than JPX Global. But when comparing it to its historical volatility, Texas Gulf Energy is 21.58 times less risky than JPX Global. It trades about 0.05 of its potential returns per unit of risk. JPX Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.17  in JPX Global on October 11, 2024 and sell it today you would lose (0.16) from holding JPX Global or give up 94.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Texas Gulf Energy  vs.  JPX Global

Texas Gulf Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Gulf Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Texas Gulf is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPX Global

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPX Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, JPX Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Texas Gulf and JPX Global

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

The idea behind Texas Gulf Energy and JPX Global 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.