Correlation Between Jilin Chemical and Xiangpiaopiao Food

Can any of the company-specific risk be diversified away by investing in both Jilin Chemical and Xiangpiaopiao Food 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 Xiangpiaopiao Food 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 Xiangpiaopiao Food Co, you can compare the effects of market volatilities on Jilin Chemical and Xiangpiaopiao Food 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 Xiangpiaopiao Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jilin Chemical and Xiangpiaopiao Food.

Diversification Opportunities for Jilin Chemical and Xiangpiaopiao Food

0.62

Correlation Coefficient

Jilin Chemical  Xiangpiaopiao Food

Poor diversification

The 3 months correlation between Jilin and Xiangpiaopiao is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jilin Chemical Fibre and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food 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 Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Jilin Chemical i.e., Jilin Chemical and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Jilin Chemical and Xiangpiaopiao Food

Assuming the 90 days trading horizon Jilin Chemical Fibre is expected to under-perform the Xiangpiaopiao Food. But the stock apears to be less risky and, when comparing its historical volatility, Jilin Chemical Fibre is 1.19 times less risky than Xiangpiaopiao Food. The stock trades about -0.01 of its potential returns per unit of risk. The Xiangpiaopiao Food Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,517  in Xiangpiaopiao Food Co on October 10, 2024 and sell it today you would lose (63.00) from holding Xiangpiaopiao Food Co or give up 4.15% of portfolio value over 90 days.

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

Jilin Chemical Fibre  vs.  Xiangpiaopiao Food Co

Jilin Chemical Fibre

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jilin Chemical Fibre are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jilin Chemical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xiangpiaopiao Food

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangpiaopiao Food Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangpiaopiao Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jilin Chemical and Xiangpiaopiao Food

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

The idea behind Jilin Chemical Fibre and Xiangpiaopiao Food 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.