Correlation Between Chow Steel and JCK Hospitality

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

By analyzing existing cross correlation between Chow Steel Industries and JCK Hospitality Public, you can compare the effects of market volatilities on Chow Steel and JCK Hospitality 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 Chow Steel with a short position of JCK Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chow Steel and JCK Hospitality.

Diversification Opportunities for Chow Steel and JCK Hospitality

-0.29

Correlation Coefficient

Chow Steel  JCK Hospitality

Very good diversification

The 3 months correlation between Chow and JCK is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chow Steel Industries and JCK Hospitality Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCK Hospitality Public and Chow Steel 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 Chow Steel Industries are associated (or correlated) with JCK Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCK Hospitality Public has no effect on the direction of Chow Steel i.e., Chow Steel and JCK Hospitality go up and down completely randomly.

Pair Corralation between Chow Steel and JCK Hospitality

Assuming the 90 days trading horizon Chow Steel Industries is expected to under-perform the JCK Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Chow Steel Industries is 17.97 times less risky than JCK Hospitality. The stock trades about -0.6 of its potential returns per unit of risk. The JCK Hospitality Public is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2.00  in JCK Hospitality Public on September 24, 2024 and sell it today you would earn a total of  1.00  from holding JCK Hospitality Public or generate 50.0% return on investment over 90 days.

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

Chow Steel Industries  vs.  JCK Hospitality Public

Chow Steel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chow Steel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

JCK Hospitality Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JCK Hospitality Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, JCK Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chow Steel and JCK Hospitality

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

The idea behind Chow Steel Industries and JCK Hospitality Public 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .