Correlation Between China Jo and PetMed Express

Can any of the company-specific risk be diversified away by investing in both China Jo and PetMed Express 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 PetMed Express 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 PetMed Express, you can compare the effects of market volatilities on China Jo and PetMed Express 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 PetMed Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Jo and PetMed Express.

Diversification Opportunities for China Jo and PetMed Express

0.49

Correlation Coefficient

China Jo  PetMed Express

Very weak diversification

The 3 months correlation between China and PetMed is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express 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 PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of China Jo i.e., China Jo and PetMed Express go up and down completely randomly.

Pair Corralation between China Jo and PetMed Express

Given the investment horizon of 90 days China Jo is expected to generate 1.31 times less return on investment than PetMed Express. In addition to that, China Jo is 1.3 times more volatile than PetMed Express. It trades about 0.14 of its total potential returns per unit of risk. PetMed Express is currently generating about 0.23 per unit of volatility. If you would invest  328.00  in PetMed Express on August 10, 2024 and sell it today you would earn a total of  245.00  from holding PetMed Express or generate 74.7% return on investment over 90 days.

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

China Jo Jo Drugstores  vs.  PetMed Express

China Jo Jo

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Jo Jo Drugstores are ranked lower than 4 (%) 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.

PetMed Express

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PetMed Express are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, PetMed Express unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Jo and PetMed Express

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

The idea behind China Jo Jo Drugstores and PetMed Express 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..