Correlation Between Hurum and Jahwa Electron

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

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

Diversification Opportunities for Hurum and Jahwa Electron

0.95

Correlation Coefficient

Hurum  Jahwa Electron

Almost no diversification

The 3 months correlation between Hurum and Jahwa is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and Jahwa Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jahwa Electron and Hurum 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 Hurum Co are associated (or correlated) with Jahwa Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jahwa Electron has no effect on the direction of Hurum i.e., Hurum and Jahwa Electron go up and down completely randomly.

Pair Corralation between Hurum and Jahwa Electron

Assuming the 90 days trading horizon Hurum Co is expected to generate 0.83 times more return on investment than Jahwa Electron. However, Hurum Co is 1.2 times less risky than Jahwa Electron. It trades about -0.17 of its potential returns per unit of risk. Jahwa Electron is currently generating about -0.29 per unit of risk. If you would invest  92,200  in Hurum Co on August 31, 2024 and sell it today you would lose (19,500) from holding Hurum Co or give up 21.15% of portfolio value over 90 days.

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

Hurum Co  vs.  Jahwa Electron

Hurum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurum Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Jahwa Electron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jahwa Electron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hurum and Jahwa Electron

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

The idea behind Hurum Co and Jahwa Electron 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.