Correlation Between JCK Hospitality and Home Pottery

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

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

Diversification Opportunities for JCK Hospitality and Home Pottery

-0.22

Correlation Coefficient

JCK Hospitality  Home Pottery

Very good diversification

The 3 months correlation between JCK and Home is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding JCK Hospitality Public and Home Pottery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Pottery Public and JCK Hospitality 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 JCK Hospitality Public are associated (or correlated) with Home Pottery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Pottery Public has no effect on the direction of JCK Hospitality i.e., JCK Hospitality and Home Pottery go up and down completely randomly.

Pair Corralation between JCK Hospitality and Home Pottery

Assuming the 90 days trading horizon JCK Hospitality Public is expected to generate 11.5 times more return on investment than Home Pottery. However, JCK Hospitality is 11.5 times more volatile than Home Pottery Public. It trades about 0.13 of its potential returns per unit of risk. Home Pottery Public is currently generating about -0.12 per unit of risk. 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

JCK Hospitality Public  vs.  Home Pottery Public

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 conflicting forward-looking signals, JCK Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Home Pottery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Pottery Public 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 basic indicators 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.

Pair Trading with JCK Hospitality and Home Pottery

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

The idea behind JCK Hospitality Public and Home Pottery 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.