Correlation Between Advanced Technology and Juneyao Airlines

Can any of the company-specific risk be diversified away by investing in both Advanced Technology and Juneyao Airlines 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 Advanced Technology and Juneyao Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advanced Technology Materials and Juneyao Airlines, you can compare the effects of market volatilities on Advanced Technology and Juneyao Airlines 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 Advanced Technology with a short position of Juneyao Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and Juneyao Airlines.

Diversification Opportunities for Advanced Technology and Juneyao Airlines

0.91

Correlation Coefficient

Advanced Technology  Juneyao Airlines

Almost no diversification

The 3 months correlation between Advanced and Juneyao is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and Juneyao Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juneyao Airlines and Advanced Technology 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 Advanced Technology Materials are associated (or correlated) with Juneyao Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juneyao Airlines has no effect on the direction of Advanced Technology i.e., Advanced Technology and Juneyao Airlines go up and down completely randomly.

Pair Corralation between Advanced Technology and Juneyao Airlines

Assuming the 90 days trading horizon Advanced Technology Materials is expected to under-perform the Juneyao Airlines. In addition to that, Advanced Technology is 1.09 times more volatile than Juneyao Airlines. It trades about -0.28 of its total potential returns per unit of risk. Juneyao Airlines is currently generating about 0.02 per unit of volatility. If you would invest  1,420  in Juneyao Airlines on September 24, 2024 and sell it today you would earn a total of  7.00  from holding Juneyao Airlines or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Advanced Technology Materials  vs.  Juneyao Airlines

Advanced Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Technology Materials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Advanced Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Juneyao Airlines

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Juneyao Airlines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Juneyao Airlines sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Technology and Juneyao Airlines

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

The idea behind Advanced Technology Materials and Juneyao Airlines 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.