Correlation Between ES Ceramics and JF Technology

Can any of the company-specific risk be diversified away by investing in both ES Ceramics and JF Technology 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 ES Ceramics and JF Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ES Ceramics Technology and JF Technology BHD, you can compare the effects of market volatilities on ES Ceramics and JF Technology 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 ES Ceramics with a short position of JF Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and JF Technology.

Diversification Opportunities for ES Ceramics and JF Technology

0.66

Correlation Coefficient

ES Ceramics  JF Technology

Poor diversification

The 3 months correlation between 0100 and 0146 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and JF Technology BHD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JF Technology BHD and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with JF Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JF Technology BHD has no effect on the direction of ES Ceramics i.e., ES Ceramics and JF Technology go up and down completely randomly.

Pair Corralation between ES Ceramics and JF Technology

Assuming the 90 days trading horizon ES Ceramics is expected to generate 7.39 times less return on investment than JF Technology. But when comparing it to its historical volatility, ES Ceramics Technology is 1.27 times less risky than JF Technology. It trades about 0.02 of its potential returns per unit of risk. JF Technology BHD is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  62.00  in JF Technology BHD on September 26, 2024 and sell it today you would earn a total of  20.00  from holding JF Technology BHD or generate 32.26% return on investment over 90 days.

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

ES Ceramics Technology  vs.  JF Technology BHD

ES Ceramics Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ES Ceramics Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, ES Ceramics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

JF Technology BHD

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JF Technology BHD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, JF Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ES Ceramics and JF Technology

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

The idea behind ES Ceramics Technology and JF Technology BHD 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.