Correlation Between Spark Networks and Jianpu Technology

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

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

Diversification Opportunities for Spark Networks and Jianpu Technology

0.8

Correlation Coefficient

Spark Networks  Jianpu Technology

Very poor diversification

The 3 months correlation between Spark and Jianpu is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Spark Networks SE and Jianpu Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianpu Technology and Spark Networks 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 Spark Networks SE 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 Spark Networks i.e., Spark Networks and Jianpu Technology go up and down completely randomly.

Pair Corralation between Spark Networks and Jianpu Technology

Considering the 90-day investment horizon Spark Networks SE is expected to under-perform the Jianpu Technology. In addition to that, Spark Networks is 2.93 times more volatile than Jianpu Technology. It trades about -0.06 of its total potential returns per unit of risk. Jianpu Technology is currently generating about -0.03 per unit of volatility. If you would invest  188.00  in Jianpu Technology on January 25, 2024 and sell it today you would lose (110.00) from holding Jianpu Technology or give up 58.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	72.36%
Values	Daily Returns

Spark Networks SE  vs.  Jianpu Technology

Spark Networks SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spark Networks SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Spark Networks is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jianpu Technology

Risk-Adjusted Performance

0 of 100

OK

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 Spark Networks and Jianpu Technology

The main advantage of trading using opposite Spark Networks and Jianpu Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spark Networks 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 Spark Networks SE 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.