Correlation Between Zhejiang JIULI and Xinjiang Goldwind

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

By analyzing existing cross correlation between Zhejiang JIULI Hi tech and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Zhejiang JIULI and Xinjiang Goldwind 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 Zhejiang JIULI with a short position of Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang JIULI and Xinjiang Goldwind.

Diversification Opportunities for Zhejiang JIULI and Xinjiang Goldwind

0.78

Correlation Coefficient

Zhejiang JIULI  Xinjiang Goldwind

Poor diversification

The 3 months correlation between Zhejiang and Xinjiang is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang JIULI Hi tech and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science and Zhejiang JIULI 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 Zhejiang JIULI Hi tech are associated (or correlated) with Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Zhejiang JIULI i.e., Zhejiang JIULI and Xinjiang Goldwind go up and down completely randomly.

Pair Corralation between Zhejiang JIULI and Xinjiang Goldwind

Assuming the 90 days trading horizon Zhejiang JIULI is expected to generate 10.62 times less return on investment than Xinjiang Goldwind. But when comparing it to its historical volatility, Zhejiang JIULI Hi tech is 1.21 times less risky than Xinjiang Goldwind. It trades about 0.02 of its potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Xinjiang Goldwind Science on September 30, 2024 and sell it today you would earn a total of  369.00  from holding Xinjiang Goldwind Science or generate 55.07% return on investment over 90 days.

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

Zhejiang JIULI Hi tech  vs.  Xinjiang Goldwind Science

Zhejiang JIULI Hi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang JIULI Hi tech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang JIULI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xinjiang Goldwind Science

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Goldwind Science are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xinjiang Goldwind is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhejiang JIULI and Xinjiang Goldwind

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

The idea behind Zhejiang JIULI Hi tech and Xinjiang Goldwind Science 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.