Correlation Between Premium Income and Jade Leader

Can any of the company-specific risk be diversified away by investing in both Premium Income and Jade Leader 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 Premium Income and Jade Leader into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Premium Income and Jade Leader Corp, you can compare the effects of market volatilities on Premium Income and Jade Leader 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 Premium Income with a short position of Jade Leader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Income and Jade Leader.

Diversification Opportunities for Premium Income and Jade Leader

0.62

Correlation Coefficient

Premium Income  Jade Leader

Poor diversification

The 3 months correlation between Premium and Jade is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and Jade Leader Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Leader Corp and Premium Income 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 Premium Income are associated (or correlated) with Jade Leader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Leader Corp has no effect on the direction of Premium Income i.e., Premium Income and Jade Leader go up and down completely randomly.

Pair Corralation between Premium Income and Jade Leader

Assuming the 90 days trading horizon Premium Income is expected to generate 0.18 times more return on investment than Jade Leader. However, Premium Income is 5.58 times less risky than Jade Leader. It trades about -0.08 of its potential returns per unit of risk. Jade Leader Corp is currently generating about -0.03 per unit of risk. If you would invest  659.00  in Premium Income on September 22, 2024 and sell it today you would lose (56.00) from holding Premium Income or give up 8.5% of portfolio value over 90 days.

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

Premium Income  vs.  Jade Leader Corp

Premium Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Jade Leader Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jade Leader Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Premium Income and Jade Leader

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

The idea behind Premium Income and Jade Leader Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.