Correlation Between Nova Lifestyle and JS Global

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

By analyzing existing cross correlation between Nova Lifestyle I and JS Global Lifestyle, you can compare the effects of market volatilities on Nova Lifestyle and JS Global 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 Nova Lifestyle with a short position of JS Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lifestyle and JS Global.

Diversification Opportunities for Nova Lifestyle and JS Global

-0.03

Correlation Coefficient

Nova Lifestyle  JS Global

Good diversification

The 3 months correlation between Nova and JGLCF is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lifestyle I and JS Global Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Global Lifestyle and Nova Lifestyle 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 Nova Lifestyle I are associated (or correlated) with JS Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Global Lifestyle has no effect on the direction of Nova Lifestyle i.e., Nova Lifestyle and JS Global go up and down completely randomly.

Pair Corralation between Nova Lifestyle and JS Global

Given the investment horizon of 90 days Nova Lifestyle I is expected to under-perform the JS Global. In addition to that, Nova Lifestyle is 2.29 times more volatile than JS Global Lifestyle. It trades about -0.32 of its total potential returns per unit of risk. JS Global Lifestyle is currently generating about -0.08 per unit of volatility. If you would invest  16.00  in JS Global Lifestyle on September 12, 2024 and sell it today you would lose (2.00) from holding JS Global Lifestyle or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Nova Lifestyle I  vs.  JS Global Lifestyle

Nova Lifestyle I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Lifestyle I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JS Global Lifestyle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JS Global Lifestyle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nova Lifestyle and JS Global

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

The idea behind Nova Lifestyle I and JS Global Lifestyle 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.