Correlation Between Groupon and Jianpu Technology

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

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

Diversification Opportunities for Groupon and Jianpu Technology

0.54

Correlation Coefficient

Groupon  Jianpu Technology

Very weak diversification

The 3 months correlation between Groupon and Jianpu is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Groupon and Jianpu Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianpu Technology and Groupon 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 Groupon 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 Groupon i.e., Groupon and Jianpu Technology go up and down completely randomly.

Pair Corralation between Groupon and Jianpu Technology

If you would invest  78.00  in Jianpu Technology on January 27, 2024 and sell it today you would earn a total of  0.00  from holding Jianpu Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Groupon  vs.  Jianpu Technology

Groupon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupon 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Jianpu Technology

Risk-Adjusted Performance

0 of 100

Solid

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 Groupon and Jianpu Technology

The main advantage of trading using opposite Groupon and Jianpu Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groupon 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 Groupon 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.