Correlation Between Jilin Chemical and JiShi Media

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

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

Diversification Opportunities for Jilin Chemical and JiShi Media

0.79

Correlation Coefficient

Jilin Chemical  JiShi Media

Poor diversification

The 3 months correlation between Jilin and JiShi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jilin Chemical Fibre and JiShi Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JiShi Media and Jilin Chemical 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 Jilin Chemical Fibre are associated (or correlated) with JiShi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JiShi Media has no effect on the direction of Jilin Chemical i.e., Jilin Chemical and JiShi Media go up and down completely randomly.

Pair Corralation between Jilin Chemical and JiShi Media

Assuming the 90 days trading horizon Jilin Chemical Fibre is expected to generate 0.67 times more return on investment than JiShi Media. However, Jilin Chemical Fibre is 1.5 times less risky than JiShi Media. It trades about 0.16 of its potential returns per unit of risk. JiShi Media Co is currently generating about -0.12 per unit of risk. If you would invest  359.00  in Jilin Chemical Fibre on December 10, 2024 and sell it today you would earn a total of  25.00  from holding Jilin Chemical Fibre or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Jilin Chemical Fibre  vs.  JiShi Media Co

Jilin Chemical Fibre

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jilin Chemical Fibre has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

JiShi Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days JiShi Media Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jilin Chemical and JiShi Media

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

The idea behind Jilin Chemical Fibre and JiShi Media Co 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.