Correlation Between Eastern Commercial and JMT Network
Can any of the company-specific risk be diversified away by investing in both Eastern Commercial and JMT Network 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 Eastern Commercial and JMT Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Commercial Leasing and JMT Network Services, you can compare the effects of market volatilities on Eastern Commercial and JMT Network 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 Eastern Commercial with a short position of JMT Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Commercial and JMT Network.
Diversification Opportunities for Eastern Commercial and JMT Network
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eastern and JMT is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Commercial Leasing and JMT Network Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JMT Network Services and Eastern Commercial 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 Eastern Commercial Leasing are associated (or correlated) with JMT Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JMT Network Services has no effect on the direction of Eastern Commercial i.e., Eastern Commercial and JMT Network go up and down completely randomly.
Pair Corralation between Eastern Commercial and JMT Network
Assuming the 90 days trading horizon Eastern Commercial Leasing is expected to under-perform the JMT Network. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Commercial Leasing is 1.64 times less risky than JMT Network. The stock trades about -0.09 of its potential returns per unit of risk. The JMT Network Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,101 in JMT Network Services on January 25, 2024 and sell it today you would lose (11.00) from holding JMT Network Services or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Commercial Leasing vs. JMT Network Services
Performance |
| Timeline |
| Eastern Commercial |
| JMT Network Services |
Eastern Commercial and JMT Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Commercial and JMT Network
The main advantage of trading using opposite Eastern Commercial and JMT Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Commercial position performs unexpectedly, JMT Network 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 JMT Network will offset losses from the drop in JMT Network's long position.The idea behind Eastern Commercial Leasing and JMT Network Services 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.| JMT Network vs. Plan B Media | JMT Network vs. Major Cineplex Group | JMT Network vs. Somboon Advance Technology | JMT Network vs. LPN Development Public |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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