Correlation Between PING and JAR

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

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

Diversification Opportunities for PING and JAR

-0.15

Correlation Coefficient

PING  JAR

Good diversification

The 3 months correlation between PING and JAR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PING and JAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAR and PING 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 PING are associated (or correlated) with JAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAR has no effect on the direction of PING i.e., PING and JAR go up and down completely randomly.

Pair Corralation between PING and JAR

Assuming the 90 days trading horizon PING is expected to generate 1.23 times more return on investment than JAR. However, PING is 1.23 times more volatile than JAR. It trades about 0.05 of its potential returns per unit of risk. JAR is currently generating about 0.05 per unit of risk. If you would invest  5.57  in PING on January 30, 2024 and sell it today you would earn a total of  10.43  from holding PING or generate 187.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.23%
Values	Daily Returns

PING  vs.  JAR

PING

Risk-Adjusted Performance

0 of 100

Very Weak

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

JAR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JAR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PING and JAR

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

The idea behind PING and JAR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.