Correlation Between UPS CDR and Jade Leader

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

By analyzing existing cross correlation between UPS CDR and Jade Leader Corp, you can compare the effects of market volatilities on UPS CDR and Jade Leader 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 UPS CDR with a short position of Jade Leader. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPS CDR and Jade Leader.

Diversification Opportunities for UPS CDR and Jade Leader

-0.46

Correlation Coefficient

UPS CDR  Jade Leader

Very good diversification

The 3 months correlation between UPS and Jade is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and Jade Leader Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Leader Corp and UPS CDR 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 UPS CDR are associated (or correlated) with Jade Leader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Leader Corp has no effect on the direction of UPS CDR i.e., UPS CDR and Jade Leader go up and down completely randomly.

Pair Corralation between UPS CDR and Jade Leader

Assuming the 90 days trading horizon UPS CDR is expected to under-perform the Jade Leader. But the stock apears to be less risky and, when comparing its historical volatility, UPS CDR is 13.76 times less risky than Jade Leader. The stock trades about -0.08 of its potential returns per unit of risk. The Jade Leader Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Jade Leader Corp on December 1, 2024 and sell it today you would earn a total of  3.50  from holding Jade Leader Corp or generate 175.0% return on investment over 90 days.

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

UPS CDR  vs.  Jade Leader Corp

UPS CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days UPS CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Jade Leader Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jade Leader Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Jade Leader showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UPS CDR and Jade Leader

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

The idea behind UPS CDR and Jade Leader Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.