Correlation Between Jadeart and Swatch

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Jadeart and Swatch 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 Swatch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jadeart Group and The Swatch Group, you can compare the effects of market volatilities on Jadeart and Swatch 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 Swatch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jadeart and Swatch.

Diversification Opportunities for Jadeart and Swatch

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Jadeart and Swatch is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jadeart Group and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Jadeart i.e., Jadeart and Swatch go up and down completely randomly.

Pair Corralation between Jadeart and Swatch

Given the investment horizon of 90 days Jadeart Group is expected to generate 11.06 times more return on investment than Swatch. However, Jadeart is 11.06 times more volatile than The Swatch Group. It trades about 0.04 of its potential returns per unit of risk. The Swatch Group is currently generating about -0.25 per unit of risk. If you would invest  1.20  in Jadeart Group on December 29, 2023 and sell it today you would lose (0.10) from holding Jadeart Group or give up 8.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jadeart Group  vs.  The Swatch Group

 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 inconsistent fundamental indicators, Jadeart sustained solid returns over the last few months and may actually be approaching a breakup point.
Swatch Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days The Swatch Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Jadeart and Swatch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jadeart and Swatch

The main advantage of trading using opposite Jadeart and Swatch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jadeart position performs unexpectedly, Swatch 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 Swatch will offset losses from the drop in Swatch's long position.
The idea behind Jadeart Group and The Swatch Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators