Correlation Between Jupai Holdings and Prospect Capital

Can any of the company-specific risk be diversified away by investing in both Jupai Holdings and Prospect Capital 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 Jupai Holdings and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jupai Holdings Limited and Prospect Capital, you can compare the effects of market volatilities on Jupai Holdings and Prospect Capital 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 Jupai Holdings with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jupai Holdings and Prospect Capital.

Diversification Opportunities for Jupai Holdings and Prospect Capital

-0.56

Correlation Coefficient

Jupai Holdings  Prospect Capital

Excellent diversification

The 3 months correlation between Jupai and Prospect is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Jupai Holdings Limited and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Jupai Holdings 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 Jupai Holdings Limited are associated (or correlated) with Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Jupai Holdings i.e., Jupai Holdings and Prospect Capital go up and down completely randomly.

Pair Corralation between Jupai Holdings and Prospect Capital

If you would invest  1,965  in Prospect Capital on July 15, 2024 and sell it today you would earn a total of  120.00  from holding Prospect Capital or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Jupai Holdings Limited  vs.  Prospect Capital

Jupai Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jupai Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Jupai Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prospect Capital

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Jupai Holdings and Prospect Capital

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

The idea behind Jupai Holdings Limited and Prospect Capital 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.