Correlation Between JS Corrugating and GreenTech Environmental

Can any of the company-specific risk be diversified away by investing in both JS Corrugating and GreenTech Environmental 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 JS Corrugating and GreenTech Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JS Corrugating Machinery and GreenTech Environmental Co, you can compare the effects of market volatilities on JS Corrugating and GreenTech Environmental 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 JS Corrugating with a short position of GreenTech Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Corrugating and GreenTech Environmental.

Diversification Opportunities for JS Corrugating and GreenTech Environmental

0.45

Correlation Coefficient

JS Corrugating  GreenTech Environmental

Very weak diversification

The 3 months correlation between 000821 and GreenTech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JS Corrugating Machinery and GreenTech Environmental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTech Environmental and JS Corrugating 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 JS Corrugating Machinery are associated (or correlated) with GreenTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTech Environmental has no effect on the direction of JS Corrugating i.e., JS Corrugating and GreenTech Environmental go up and down completely randomly.

Pair Corralation between JS Corrugating and GreenTech Environmental

Assuming the 90 days trading horizon JS Corrugating Machinery is expected to generate 1.07 times more return on investment than GreenTech Environmental. However, JS Corrugating is 1.07 times more volatile than GreenTech Environmental Co. It trades about -0.05 of its potential returns per unit of risk. GreenTech Environmental Co is currently generating about -0.09 per unit of risk. If you would invest  1,289  in JS Corrugating Machinery on October 23, 2024 and sell it today you would lose (35.00) from holding JS Corrugating Machinery or give up 2.72% of portfolio value over 90 days.

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

JS Corrugating Machinery  vs.  GreenTech Environmental Co

JS Corrugating Machinery

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JS Corrugating Machinery are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JS Corrugating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GreenTech Environmental

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTech Environmental Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GreenTech Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JS Corrugating and GreenTech Environmental

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

The idea behind JS Corrugating Machinery and GreenTech Environmental 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.