Correlation Between Invengo Information and Jinhui Liquor

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

By analyzing existing cross correlation between Invengo Information Technology and Jinhui Liquor Co, you can compare the effects of market volatilities on Invengo Information and Jinhui Liquor 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 Invengo Information with a short position of Jinhui Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invengo Information and Jinhui Liquor.

Diversification Opportunities for Invengo Information and Jinhui Liquor

0.61

Correlation Coefficient

Invengo Information  Jinhui Liquor

Poor diversification

The 3 months correlation between Invengo and Jinhui is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Invengo Information Technology and Jinhui Liquor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhui Liquor and Invengo Information 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 Invengo Information Technology are associated (or correlated) with Jinhui Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinhui Liquor has no effect on the direction of Invengo Information i.e., Invengo Information and Jinhui Liquor go up and down completely randomly.

Pair Corralation between Invengo Information and Jinhui Liquor

Assuming the 90 days trading horizon Invengo Information Technology is expected to under-perform the Jinhui Liquor. In addition to that, Invengo Information is 2.46 times more volatile than Jinhui Liquor Co. It trades about -0.06 of its total potential returns per unit of risk. Jinhui Liquor Co is currently generating about -0.06 per unit of volatility. If you would invest  2,042  in Jinhui Liquor Co on September 25, 2024 and sell it today you would lose (58.00) from holding Jinhui Liquor Co or give up 2.84% of portfolio value over 90 days.

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

Invengo Information Technology  vs.  Jinhui Liquor Co

Invengo Information

Risk-Adjusted Performance

12 of 100

Good

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

Jinhui Liquor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhui Liquor Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinhui Liquor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invengo Information and Jinhui Liquor

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

The idea behind Invengo Information Technology and Jinhui Liquor 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.