Correlation Between Jointo Energy and Shandong Pharmaceutical

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

Diversification Opportunities for Jointo Energy and Shandong Pharmaceutical

0.63

Correlation Coefficient

Jointo Energy  Shandong Pharmaceutical

Poor diversification

The 3 months correlation between Jointo and Shandong is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Jointo Energy Investment and Shandong Pharmaceutical Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Pharmaceutical 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 Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Pharmaceutical has no effect on the direction of Jointo Energy i.e., Jointo Energy and Shandong Pharmaceutical go up and down completely randomly.

Pair Corralation between Jointo Energy and Shandong Pharmaceutical

Assuming the 90 days trading horizon Jointo Energy Investment is expected to under-perform the Shandong Pharmaceutical. In addition to that, Jointo Energy is 1.6 times more volatile than Shandong Pharmaceutical Glass. It trades about -0.17 of its total potential returns per unit of risk. Shandong Pharmaceutical Glass is currently generating about -0.2 per unit of volatility. If you would invest  2,621  in Shandong Pharmaceutical Glass on October 27, 2024 and sell it today you would lose (198.00) from holding Shandong Pharmaceutical Glass or give up 7.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Jointo Energy Investment  vs.  Shandong Pharmaceutical Glass

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.

Shandong Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Pharmaceutical Glass 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 Pharmaceutical

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

The idea behind Jointo Energy Investment and Shandong Pharmaceutical Glass 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.