Correlation Between Jiangnan Mould and Advanced Technology

Can any of the company-specific risk be diversified away by investing in both Jiangnan Mould and Advanced Technology 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 Jiangnan Mould and Advanced Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangnan Mould Plastic and Advanced Technology Materials, you can compare the effects of market volatilities on Jiangnan Mould and Advanced Technology 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 Jiangnan Mould with a short position of Advanced Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangnan Mould and Advanced Technology.

Diversification Opportunities for Jiangnan Mould and Advanced Technology

0.9

Correlation Coefficient

Jiangnan Mould  Advanced Technology

Almost no diversification

The 3 months correlation between Jiangnan and Advanced is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Jiangnan Mould Plastic and Advanced Technology Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Technology and Jiangnan Mould 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 Jiangnan Mould Plastic are associated (or correlated) with Advanced Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Technology has no effect on the direction of Jiangnan Mould i.e., Jiangnan Mould and Advanced Technology go up and down completely randomly.

Pair Corralation between Jiangnan Mould and Advanced Technology

Assuming the 90 days trading horizon Jiangnan Mould Plastic is expected to generate 1.26 times more return on investment than Advanced Technology. However, Jiangnan Mould is 1.26 times more volatile than Advanced Technology Materials. It trades about 0.04 of its potential returns per unit of risk. Advanced Technology Materials is currently generating about 0.03 per unit of risk. If you would invest  563.00  in Jiangnan Mould Plastic on October 4, 2024 and sell it today you would earn a total of  139.00  from holding Jiangnan Mould Plastic or generate 24.69% return on investment over 90 days.

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

Jiangnan Mould Plastic  vs.  Advanced Technology Materials

Jiangnan Mould Plastic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Advanced Technology

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Jiangnan Mould and Advanced Technology

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

The idea behind Jiangnan Mould Plastic and Advanced Technology Materials 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.