Correlation Between China Jo and High Tide

Can any of the company-specific risk be diversified away by investing in both China Jo and High Tide 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 China Jo and High Tide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Jo Jo Drugstores and High Tide, you can compare the effects of market volatilities on China Jo and High Tide 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 China Jo with a short position of High Tide. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Jo and High Tide.

Diversification Opportunities for China Jo and High Tide

0.64

Correlation Coefficient

China Jo  High Tide

Poor diversification

The 3 months correlation between China and High is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and High Tide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tide and China Jo 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 China Jo Jo Drugstores are associated (or correlated) with High Tide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tide has no effect on the direction of China Jo i.e., China Jo and High Tide go up and down completely randomly.

Pair Corralation between China Jo and High Tide

Given the investment horizon of 90 days China Jo Jo Drugstores is expected to generate 2.19 times more return on investment than High Tide. However, China Jo is 2.19 times more volatile than High Tide. It trades about 0.09 of its potential returns per unit of risk. High Tide is currently generating about 0.18 per unit of risk. If you would invest  156.00  in China Jo Jo Drugstores on August 27, 2024 and sell it today you would earn a total of  44.00  from holding China Jo Jo Drugstores or generate 28.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

China Jo Jo Drugstores  vs.  High Tide

China Jo Jo

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Jo Jo Drugstores are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, China Jo exhibited solid returns over the last few months and may actually be approaching a breakup point.

High Tide

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in High Tide are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, High Tide demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Jo and High Tide

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

The idea behind China Jo Jo Drugstores and High Tide 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.