Correlation Between Jadeart and Chow Tai
Can any of the company-specific risk be diversified away by investing in both Jadeart and Chow Tai 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 Jadeart and Chow Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jadeart Group and Chow Tai Fook, you can compare the effects of market volatilities on Jadeart and Chow Tai 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 Jadeart with a short position of Chow Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jadeart and Chow Tai.
Diversification Opportunities for Jadeart and Chow Tai
Excellent diversification
The 3 months correlation between Jadeart and Chow is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Jadeart Group and Chow Tai Fook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chow Tai Fook and Jadeart 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 Jadeart Group are associated (or correlated) with Chow Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chow Tai Fook has no effect on the direction of Jadeart i.e., Jadeart and Chow Tai go up and down completely randomly.
Pair Corralation between Jadeart and Chow Tai
Given the investment horizon of 90 days Jadeart Group is expected to under-perform the Chow Tai. In addition to that, Jadeart is 9.2 times more volatile than Chow Tai Fook. It trades about -0.02 of its total potential returns per unit of risk. Chow Tai Fook is currently generating about -0.04 per unit of volatility. If you would invest 150.00 in Chow Tai Fook on January 25, 2024 and sell it today you would lose (7.00) from holding Chow Tai Fook or give up 4.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jadeart Group vs. Chow Tai Fook
Performance |
| Timeline |
| Jadeart Group |
| Chow Tai Fook |
Jadeart and Chow Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jadeart and Chow Tai
The main advantage of trading using opposite Jadeart and Chow Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jadeart position performs unexpectedly, Chow Tai 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 Chow Tai will offset losses from the drop in Chow Tai's long position.| Jadeart vs. Rivian Automotive | Jadeart vs. Nio Class A | Jadeart vs. Xpeng Inc | Jadeart vs. Mullen Automotive |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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