Correlation Between Rite Aid and China Jo

Can any of the company-specific risk be diversified away by investing in both Rite Aid and China Jo 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 Rite Aid and China Jo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rite Aid and China Jo Jo Drugstores, you can compare the effects of market volatilities on Rite Aid and China Jo 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 Rite Aid with a short position of China Jo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and China Jo.

Diversification Opportunities for Rite Aid and China Jo

-0.61

Correlation Coefficient

Rite Aid  China Jo

Excellent diversification

The 3 months correlation between Rite and China is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid and China Jo Jo Drugstores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Jo Jo and Rite Aid 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 Rite Aid are associated (or correlated) with China Jo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Jo Jo has no effect on the direction of Rite Aid i.e., Rite Aid and China Jo go up and down completely randomly.

Pair Corralation between Rite Aid and China Jo

If you would invest  162.00  in China Jo Jo Drugstores on August 30, 2024 and sell it today you would earn a total of  47.00  from holding China Jo Jo Drugstores or generate 29.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Rite Aid  vs.  China Jo Jo Drugstores

Rite Aid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rite Aid is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

China Jo Jo

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Jo Jo Drugstores are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, China Jo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rite Aid and China Jo

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

The idea behind Rite Aid and China Jo Jo Drugstores 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.