Correlation Between Allwin Telecommunicatio and Jiangxi Ganfeng

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

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

Diversification Opportunities for Allwin Telecommunicatio and Jiangxi Ganfeng

0.78

Correlation Coefficient

Allwin Telecommunicatio  Jiangxi Ganfeng

Poor diversification

The 3 months correlation between Allwin and Jiangxi is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Allwin Telecommunication Co 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 Allwin Telecommunicatio 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 Allwin Telecommunication Co 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 Allwin Telecommunicatio i.e., Allwin Telecommunicatio and Jiangxi Ganfeng go up and down completely randomly.

Pair Corralation between Allwin Telecommunicatio and Jiangxi Ganfeng

Assuming the 90 days trading horizon Allwin Telecommunicatio is expected to generate 2.71 times less return on investment than Jiangxi Ganfeng. But when comparing it to its historical volatility, Allwin Telecommunication Co is 1.54 times less risky than Jiangxi Ganfeng. It trades about 0.11 of its potential returns per unit of risk. Jiangxi Ganfeng Lithium is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,461  in Jiangxi Ganfeng Lithium on September 4, 2024 and sell it today you would earn a total of  680.00  from holding Jiangxi Ganfeng Lithium or generate 19.65% return on investment over 90 days.

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

Allwin Telecommunication Co  vs.  Jiangxi Ganfeng Lithium

Allwin Telecommunicatio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allwin Telecommunication Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allwin Telecommunicatio sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangxi Ganfeng Lithium

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Ganfeng Lithium are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Ganfeng sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allwin Telecommunicatio and Jiangxi Ganfeng

The main advantage of trading using opposite Allwin Telecommunicatio and Jiangxi Ganfeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allwin Telecommunicatio 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 Allwin Telecommunication Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.