Correlation Between Forth Smart and Jasmine International

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

By analyzing existing cross correlation between Forth Smart Service and Jasmine International Public, you can compare the effects of market volatilities on Forth Smart and Jasmine International 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 Forth Smart with a short position of Jasmine International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forth Smart and Jasmine International.

Diversification Opportunities for Forth Smart and Jasmine International

-0.37

Correlation Coefficient

Forth Smart  Jasmine International

Very good diversification

The 3 months correlation between Forth and Jasmine is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Forth Smart Service and Jasmine International Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasmine International and Forth Smart 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 Forth Smart Service are associated (or correlated) with Jasmine International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasmine International has no effect on the direction of Forth Smart i.e., Forth Smart and Jasmine International go up and down completely randomly.

Pair Corralation between Forth Smart and Jasmine International

Assuming the 90 days trading horizon Forth Smart Service is expected to under-perform the Jasmine International. But the stock apears to be less risky and, when comparing its historical volatility, Forth Smart Service is 1.23 times less risky than Jasmine International. The stock trades about -0.01 of its potential returns per unit of risk. The Jasmine International Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  167.00  in Jasmine International Public on September 4, 2024 and sell it today you would earn a total of  61.00  from holding Jasmine International Public or generate 36.53% return on investment over 90 days.

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

Forth Smart Service  vs.  Jasmine International Public

Forth Smart Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forth Smart Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Forth Smart sustained solid returns over the last few months and may actually be approaching a breakup point.

Jasmine International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jasmine International Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Forth Smart and Jasmine International

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

The idea behind Forth Smart Service and Jasmine International 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.