Correlation Between Jointo Energy and Shandong Longquan

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

By analyzing existing cross correlation between Jointo Energy Investment and Shandong Longquan Pipeline, you can compare the effects of market volatilities on Jointo Energy and Shandong Longquan 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 Jointo Energy with a short position of Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jointo Energy and Shandong Longquan.

Diversification Opportunities for Jointo Energy and Shandong Longquan

0.02

Correlation Coefficient

Jointo Energy  Shandong Longquan

Significant diversification

The 3 months correlation between Jointo and Shandong is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Jointo Energy Investment and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan and Jointo Energy 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 Jointo Energy Investment are associated (or correlated) with Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of Jointo Energy i.e., Jointo Energy and Shandong Longquan go up and down completely randomly.

Pair Corralation between Jointo Energy and Shandong Longquan

Assuming the 90 days trading horizon Jointo Energy Investment is expected to generate 0.79 times more return on investment than Shandong Longquan. However, Jointo Energy Investment is 1.26 times less risky than Shandong Longquan. It trades about 0.19 of its potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about -0.02 per unit of risk. If you would invest  521.00  in Jointo Energy Investment on December 5, 2024 and sell it today you would earn a total of  25.00  from holding Jointo Energy Investment or generate 4.8% return on investment over 90 days.

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

Jointo Energy Investment  vs.  Shandong Longquan Pipeline

Jointo Energy Investment

Risk-Adjusted Performance

Insignificant

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

Shandong Longquan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Longquan Pipeline 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.

Pair Trading with Jointo Energy and Shandong Longquan

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

The idea behind Jointo Energy Investment and Shandong Longquan Pipeline 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.