Correlation Between Jadeart and Chow Tai

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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

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Jadeart and Chow is -0.28. 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 generate 6.23 times more return on investment than Chow Tai. However, Jadeart is 6.23 times more volatile than Chow Tai Fook. It trades about 0.09 of its potential returns per unit of risk. Chow Tai Fook is currently generating about -0.01 per unit of risk. If you would invest  0.81  in Jadeart Group on December 30, 2023 and sell it today you would earn a total of  0.20  from holding Jadeart Group or generate 24.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jadeart Group  vs.  Chow Tai Fook

 Performance 
       Timeline  
Jadeart Group 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Jadeart Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Jadeart sustained solid returns over the last few months and may actually be approaching a breakup point.
Chow Tai Fook 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Chow Tai Fook are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chow Tai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.
The idea behind Jadeart Group and Chow Tai Fook 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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