Correlation Between Jizhong Energy and Allmed Medical

Can any of the company-specific risk be diversified away by investing in both Jizhong Energy and Allmed Medical 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 Jizhong Energy and Allmed Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jizhong Energy Resources and Allmed Medical Products, you can compare the effects of market volatilities on Jizhong Energy and Allmed Medical 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 Jizhong Energy with a short position of Allmed Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jizhong Energy and Allmed Medical.

Diversification Opportunities for Jizhong Energy and Allmed Medical

-0.25

Correlation Coefficient

Jizhong Energy  Allmed Medical

Very good diversification

The 3 months correlation between Jizhong and Allmed is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jizhong Energy Resources and Allmed Medical Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allmed Medical Products and Jizhong Energy 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 Jizhong Energy Resources are associated (or correlated) with Allmed Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allmed Medical Products has no effect on the direction of Jizhong Energy i.e., Jizhong Energy and Allmed Medical go up and down completely randomly.

Pair Corralation between Jizhong Energy and Allmed Medical

Assuming the 90 days trading horizon Jizhong Energy Resources is expected to under-perform the Allmed Medical. But the stock apears to be less risky and, when comparing its historical volatility, Jizhong Energy Resources is 2.07 times less risky than Allmed Medical. The stock trades about -0.12 of its potential returns per unit of risk. The Allmed Medical Products is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  872.00  in Allmed Medical Products on December 25, 2024 and sell it today you would earn a total of  14.00  from holding Allmed Medical Products or generate 1.61% return on investment over 90 days.

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

Jizhong Energy Resources  vs.  Allmed Medical Products

Jizhong Energy Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jizhong Energy Resources 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.

Allmed Medical Products

Risk-Adjusted Performance

Weak

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

Pair Trading with Jizhong Energy and Allmed Medical

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

The idea behind Jizhong Energy Resources and Allmed Medical Products 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.