Correlation Between Jianpu Technology and Groupon

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Can any of the company-specific risk be diversified away by investing in both Jianpu Technology and Groupon 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 Jianpu Technology and Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jianpu Technology and Groupon, you can compare the effects of market volatilities on Jianpu Technology and Groupon 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 Jianpu Technology with a short position of Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jianpu Technology and Groupon.

Diversification Opportunities for Jianpu Technology and Groupon

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Jianpu and Groupon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jianpu Technology and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Jianpu Technology 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 Jianpu Technology are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Jianpu Technology i.e., Jianpu Technology and Groupon go up and down completely randomly.

Pair Corralation between Jianpu Technology and Groupon

Allowing for the 90-day total investment horizon Jianpu Technology is expected to generate 2.28 times less return on investment than Groupon. But when comparing it to its historical volatility, Jianpu Technology is 1.27 times less risky than Groupon. It trades about 0.01 of its potential returns per unit of risk. Groupon is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,944  in Groupon on December 30, 2023 and sell it today you would lose (610.00) from holding Groupon or give up 31.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy94.74%
ValuesDaily Returns

Jianpu Technology  vs.  Groupon

 Performance 
       Timeline  
Jianpu Technology 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
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 conflicting basic indicators, Jianpu Technology may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Groupon 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Groupon are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Groupon displayed solid returns over the last few months and may actually be approaching a breakup point.

Jianpu Technology and Groupon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jianpu Technology and Groupon

The main advantage of trading using opposite Jianpu Technology and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jianpu Technology position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.
The idea behind Jianpu Technology and Groupon 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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