Correlation Between Jiangnan Mould and Shanghai Lingyun

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

Diversification Opportunities for Jiangnan Mould and Shanghai Lingyun

0.24

Correlation Coefficient

Jiangnan Mould  Shanghai Lingyun

Modest diversification

The 3 months correlation between Jiangnan and Shanghai is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Jiangnan Mould Plastic and Shanghai Lingyun Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Lingyun Ind 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 Shanghai Lingyun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Lingyun Ind has no effect on the direction of Jiangnan Mould i.e., Jiangnan Mould and Shanghai Lingyun go up and down completely randomly.

Pair Corralation between Jiangnan Mould and Shanghai Lingyun

Assuming the 90 days trading horizon Jiangnan Mould Plastic is expected to under-perform the Shanghai Lingyun. But the stock apears to be less risky and, when comparing its historical volatility, Jiangnan Mould Plastic is 1.47 times less risky than Shanghai Lingyun. The stock trades about -0.01 of its potential returns per unit of risk. The Shanghai Lingyun Industries is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Shanghai Lingyun Industries on October 11, 2024 and sell it today you would lose (12.00) from holding Shanghai Lingyun Industries or give up 27.91% of portfolio value over 90 days.

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

Jiangnan Mould Plastic  vs.  Shanghai Lingyun Industries

Jiangnan Mould Plastic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangnan Mould Plastic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangnan Mould may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shanghai Lingyun Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Lingyun Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shanghai Lingyun 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 Shanghai Lingyun

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

The idea behind Jiangnan Mould Plastic and Shanghai Lingyun Industries 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.