Correlation Between Guangdong Jingyi and Yunnan Jianzhijia

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

By analyzing existing cross correlation between Guangdong Jingyi Metal and Yunnan Jianzhijia Health Chain, you can compare the effects of market volatilities on Guangdong Jingyi and Yunnan Jianzhijia 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 Guangdong Jingyi with a short position of Yunnan Jianzhijia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Yunnan Jianzhijia.

Diversification Opportunities for Guangdong Jingyi and Yunnan Jianzhijia

0.84

Correlation Coefficient

Guangdong Jingyi  Yunnan Jianzhijia

Very poor diversification

The 3 months correlation between Guangdong and Yunnan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Yunnan Jianzhijia Health Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Jianzhijia and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with Yunnan Jianzhijia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Jianzhijia has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Yunnan Jianzhijia go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and Yunnan Jianzhijia

Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 0.76 times more return on investment than Yunnan Jianzhijia. However, Guangdong Jingyi Metal is 1.31 times less risky than Yunnan Jianzhijia. It trades about 0.0 of its potential returns per unit of risk. Yunnan Jianzhijia Health Chain is currently generating about -0.04 per unit of risk. If you would invest  627.00  in Guangdong Jingyi Metal on October 8, 2024 and sell it today you would lose (19.00) from holding Guangdong Jingyi Metal or give up 3.03% of portfolio value over 90 days.

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

Guangdong Jingyi Metal  vs.  Yunnan Jianzhijia Health Chain

Guangdong Jingyi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Yunnan Jianzhijia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yunnan Jianzhijia Health Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guangdong Jingyi and Yunnan Jianzhijia

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

The idea behind Guangdong Jingyi Metal and Yunnan Jianzhijia Health Chain 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.