Correlation Between Champion Microelectronic and Jean

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

By analyzing existing cross correlation between Champion Microelectronic Corp and Jean Co, you can compare the effects of market volatilities on Champion Microelectronic and Jean 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 Champion Microelectronic with a short position of Jean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Microelectronic and Jean.

Diversification Opportunities for Champion Microelectronic and Jean

-0.51

Correlation Coefficient

Champion Microelectronic  Jean

Excellent diversification

The 3 months correlation between Champion and Jean is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Champion Microelectronic Corp and Jean Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jean and Champion Microelectronic 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 Champion Microelectronic Corp are associated (or correlated) with Jean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jean has no effect on the direction of Champion Microelectronic i.e., Champion Microelectronic and Jean go up and down completely randomly.

Pair Corralation between Champion Microelectronic and Jean

Assuming the 90 days trading horizon Champion Microelectronic Corp is expected to under-perform the Jean. In addition to that, Champion Microelectronic is 1.7 times more volatile than Jean Co. It trades about -0.18 of its total potential returns per unit of risk. Jean Co is currently generating about -0.13 per unit of volatility. If you would invest  2,585  in Jean Co on September 22, 2024 and sell it today you would lose (180.00) from holding Jean Co or give up 6.96% of portfolio value over 90 days.

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

Champion Microelectronic Corp  vs.  Jean Co

Champion Microelectronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Microelectronic Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Champion Microelectronic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jean Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Champion Microelectronic and Jean

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

The idea behind Champion Microelectronic Corp and Jean Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.