Correlation Between GRG Banking and Jiangxi Ganfeng

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

By analyzing existing cross correlation between GRG Banking Equipment and Jiangxi Ganfeng Lithium, you can compare the effects of market volatilities on GRG Banking and Jiangxi Ganfeng 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 GRG Banking with a short position of Jiangxi Ganfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRG Banking and Jiangxi Ganfeng.

Diversification Opportunities for GRG Banking and Jiangxi Ganfeng

0.67

Correlation Coefficient

GRG Banking  Jiangxi Ganfeng

Poor diversification

The 3 months correlation between GRG and Jiangxi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GRG Banking Equipment and Jiangxi Ganfeng Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Ganfeng Lithium and GRG Banking 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 GRG Banking Equipment are associated (or correlated) with Jiangxi Ganfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Ganfeng Lithium has no effect on the direction of GRG Banking i.e., GRG Banking and Jiangxi Ganfeng go up and down completely randomly.

Pair Corralation between GRG Banking and Jiangxi Ganfeng

Assuming the 90 days trading horizon GRG Banking Equipment is expected to under-perform the Jiangxi Ganfeng. But the stock apears to be less risky and, when comparing its historical volatility, GRG Banking Equipment is 1.07 times less risky than Jiangxi Ganfeng. The stock trades about -0.46 of its potential returns per unit of risk. The Jiangxi Ganfeng Lithium is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest  3,953  in Jiangxi Ganfeng Lithium on October 10, 2024 and sell it today you would lose (478.00) from holding Jiangxi Ganfeng Lithium or give up 12.09% of portfolio value over 90 days.

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

GRG Banking Equipment  vs.  Jiangxi Ganfeng Lithium

GRG Banking Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jiangxi Ganfeng Lithium

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Ganfeng Lithium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Ganfeng may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GRG Banking and Jiangxi Ganfeng

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

The idea behind GRG Banking Equipment and Jiangxi Ganfeng Lithium 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 Transaction History module to view history of all your transactions and understand their impact on performance.