Correlation Between Godaddy and Jianpu Technology

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

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

Diversification Opportunities for Godaddy and Jianpu Technology

-0.7

Correlation Coefficient

Godaddy  Jianpu Technology

Excellent diversification

The 3 months correlation between Godaddy and Jianpu is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Godaddy and Jianpu Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianpu Technology and Godaddy 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 Godaddy are associated (or correlated) with Jianpu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jianpu Technology has no effect on the direction of Godaddy i.e., Godaddy and Jianpu Technology go up and down completely randomly.

Pair Corralation between Godaddy and Jianpu Technology

Given the investment horizon of 90 days Godaddy is expected to generate 3.29 times less return on investment than Jianpu Technology. But when comparing it to its historical volatility, Godaddy is 3.57 times less risky than Jianpu Technology. It trades about 0.18 of its potential returns per unit of risk. Jianpu Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Jianpu Technology on February 8, 2024 and sell it today you would earn a total of  5.00  from holding Jianpu Technology or generate 6.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	14.52%
Values	Daily Returns

Godaddy  vs.  Jianpu Technology

Godaddy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Godaddy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Godaddy showed solid returns over the last few months and may actually be approaching a breakup point.

Jianpu Technology

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Jianpu Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Jianpu Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Godaddy and Jianpu Technology

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

The idea behind Godaddy and Jianpu Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.