Correlation Between Sportsoul and Jiangsu Flowers

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

By analyzing existing cross correlation between Sportsoul Co Ltd and Jiangsu Flowers King, you can compare the effects of market volatilities on Sportsoul and Jiangsu Flowers 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 Sportsoul with a short position of Jiangsu Flowers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsoul and Jiangsu Flowers.

Diversification Opportunities for Sportsoul and Jiangsu Flowers

0.5

Correlation Coefficient

Sportsoul  Jiangsu Flowers

Very weak diversification

The 3 months correlation between Sportsoul and Jiangsu is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sportsoul Co Ltd and Jiangsu Flowers King in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Flowers King and Sportsoul 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 Sportsoul Co Ltd are associated (or correlated) with Jiangsu Flowers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Flowers King has no effect on the direction of Sportsoul i.e., Sportsoul and Jiangsu Flowers go up and down completely randomly.

Pair Corralation between Sportsoul and Jiangsu Flowers

Assuming the 90 days trading horizon Sportsoul is expected to generate 174.19 times less return on investment than Jiangsu Flowers. In addition to that, Sportsoul is 1.03 times more volatile than Jiangsu Flowers King. It trades about 0.0 of its total potential returns per unit of risk. Jiangsu Flowers King is currently generating about 0.08 per unit of volatility. If you would invest  441.00  in Jiangsu Flowers King on October 10, 2024 and sell it today you would earn a total of  781.00  from holding Jiangsu Flowers King or generate 177.1% return on investment over 90 days.

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

Sportsoul Co Ltd  vs.  Jiangsu Flowers King

Sportsoul

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportsoul Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sportsoul is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jiangsu Flowers King

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Sportsoul and Jiangsu Flowers

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

The idea behind Sportsoul Co Ltd and Jiangsu Flowers King 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.