Correlation Between Jointo Energy and HaiXin Foods

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

Diversification Opportunities for Jointo Energy and HaiXin Foods

0.45

Correlation Coefficient

Jointo Energy  HaiXin Foods

Very weak diversification

The 3 months correlation between Jointo and HaiXin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Jointo Energy Investment and HaiXin Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HaiXin Foods 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 HaiXin Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HaiXin Foods has no effect on the direction of Jointo Energy i.e., Jointo Energy and HaiXin Foods go up and down completely randomly.

Pair Corralation between Jointo Energy and HaiXin Foods

Assuming the 90 days trading horizon Jointo Energy is expected to generate 19.1 times less return on investment than HaiXin Foods. But when comparing it to its historical volatility, Jointo Energy Investment is 1.68 times less risky than HaiXin Foods. It trades about 0.01 of its potential returns per unit of risk. HaiXin Foods Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  358.00  in HaiXin Foods Co on October 10, 2024 and sell it today you would earn a total of  71.00  from holding HaiXin Foods Co or generate 19.83% return on investment over 90 days.

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

Jointo Energy Investment  vs.  HaiXin Foods Co

Jointo Energy Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jointo Energy Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jointo Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HaiXin Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HaiXin Foods Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HaiXin Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jointo Energy and HaiXin Foods

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

The idea behind Jointo Energy Investment and HaiXin Foods 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.