Correlation Between Jiangnan Mould and Sieyuan Electric

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

Diversification Opportunities for Jiangnan Mould and Sieyuan Electric

0.43

Correlation Coefficient

Jiangnan Mould  Sieyuan Electric

Very weak diversification

The 3 months correlation between Jiangnan and Sieyuan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Jiangnan Mould Plastic and Sieyuan Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sieyuan Electric 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 Sieyuan Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sieyuan Electric has no effect on the direction of Jiangnan Mould i.e., Jiangnan Mould and Sieyuan Electric go up and down completely randomly.

Pair Corralation between Jiangnan Mould and Sieyuan Electric

Assuming the 90 days trading horizon Jiangnan Mould Plastic is expected to generate 1.8 times more return on investment than Sieyuan Electric. However, Jiangnan Mould is 1.8 times more volatile than Sieyuan Electric Co. It trades about -0.01 of its potential returns per unit of risk. Sieyuan Electric Co is currently generating about -0.17 per unit of risk. If you would invest  690.00  in Jiangnan Mould Plastic on October 6, 2024 and sell it today you would lose (17.00) from holding Jiangnan Mould Plastic or give up 2.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Jiangnan Mould Plastic  vs.  Sieyuan Electric Co

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.

Sieyuan Electric

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jiangnan Mould and Sieyuan Electric

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

The idea behind Jiangnan Mould Plastic and Sieyuan Electric 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.