Correlation Between Jentech Precision and Great Taipei

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

By analyzing existing cross correlation between Jentech Precision Industrial and Great Taipei Gas, you can compare the effects of market volatilities on Jentech Precision and Great Taipei 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 Jentech Precision with a short position of Great Taipei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jentech Precision and Great Taipei.

Diversification Opportunities for Jentech Precision and Great Taipei

-0.67

Correlation Coefficient

Jentech Precision  Great Taipei

Excellent diversification

The 3 months correlation between Jentech and Great is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Jentech Precision Industrial and Great Taipei Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Taipei Gas and Jentech Precision 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 Jentech Precision Industrial are associated (or correlated) with Great Taipei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Taipei Gas has no effect on the direction of Jentech Precision i.e., Jentech Precision and Great Taipei go up and down completely randomly.

Pair Corralation between Jentech Precision and Great Taipei

Assuming the 90 days trading horizon Jentech Precision Industrial is expected to generate 12.44 times more return on investment than Great Taipei. However, Jentech Precision is 12.44 times more volatile than Great Taipei Gas. It trades about 0.13 of its potential returns per unit of risk. Great Taipei Gas is currently generating about -0.02 per unit of risk. If you would invest  121,500  in Jentech Precision Industrial on September 11, 2024 and sell it today you would earn a total of  29,500  from holding Jentech Precision Industrial or generate 24.28% return on investment over 90 days.

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

Jentech Precision Industrial  vs.  Great Taipei Gas

Jentech Precision

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jentech Precision Industrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jentech Precision showed solid returns over the last few months and may actually be approaching a breakup point.

Great Taipei Gas

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jentech Precision and Great Taipei

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

The idea behind Jentech Precision Industrial and Great Taipei Gas 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.