Correlation Between Jiugui Liquor and Tongling Nonferrous

Can any of the company-specific risk be diversified away by investing in both Jiugui Liquor and Tongling Nonferrous 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 Jiugui Liquor and Tongling Nonferrous into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiugui Liquor Co and Tongling Nonferrous Metals, you can compare the effects of market volatilities on Jiugui Liquor and Tongling Nonferrous 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 Jiugui Liquor with a short position of Tongling Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiugui Liquor and Tongling Nonferrous.

Diversification Opportunities for Jiugui Liquor and Tongling Nonferrous

0.58

Correlation Coefficient

Jiugui Liquor  Tongling Nonferrous

Very weak diversification

The 3 months correlation between Jiugui and Tongling is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Jiugui Liquor Co and Tongling Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongling Nonferrous and Jiugui Liquor 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 Jiugui Liquor Co are associated (or correlated) with Tongling Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongling Nonferrous has no effect on the direction of Jiugui Liquor i.e., Jiugui Liquor and Tongling Nonferrous go up and down completely randomly.

Pair Corralation between Jiugui Liquor and Tongling Nonferrous

Assuming the 90 days trading horizon Jiugui Liquor Co is expected to generate 1.9 times more return on investment than Tongling Nonferrous. However, Jiugui Liquor is 1.9 times more volatile than Tongling Nonferrous Metals. It trades about 0.22 of its potential returns per unit of risk. Tongling Nonferrous Metals is currently generating about -0.04 per unit of risk. If you would invest  4,365  in Jiugui Liquor Co on December 4, 2024 and sell it today you would earn a total of  386.00  from holding Jiugui Liquor Co or generate 8.84% return on investment over 90 days.

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

Jiugui Liquor Co  vs.  Tongling Nonferrous Metals

Jiugui Liquor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiugui Liquor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tongling Nonferrous

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tongling Nonferrous Metals 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 Jiugui Liquor and Tongling Nonferrous

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

The idea behind Jiugui Liquor Co and Tongling Nonferrous Metals 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.