Correlation Between Songz Automobile and Xiamen Jiarong

Can any of the company-specific risk be diversified away by investing in both Songz Automobile and Xiamen Jiarong 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 Songz Automobile and Xiamen Jiarong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Songz Automobile Air and Xiamen Jiarong Technology, you can compare the effects of market volatilities on Songz Automobile and Xiamen Jiarong 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 Songz Automobile with a short position of Xiamen Jiarong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songz Automobile and Xiamen Jiarong.

Diversification Opportunities for Songz Automobile and Xiamen Jiarong

0.66

Correlation Coefficient

Songz Automobile  Xiamen Jiarong

Poor diversification

The 3 months correlation between Songz and Xiamen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Songz Automobile Air and Xiamen Jiarong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Jiarong Technology and Songz Automobile 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 Songz Automobile Air are associated (or correlated) with Xiamen Jiarong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Jiarong Technology has no effect on the direction of Songz Automobile i.e., Songz Automobile and Xiamen Jiarong go up and down completely randomly.

Pair Corralation between Songz Automobile and Xiamen Jiarong

Assuming the 90 days trading horizon Songz Automobile is expected to generate 13.27 times less return on investment than Xiamen Jiarong. But when comparing it to its historical volatility, Songz Automobile Air is 1.44 times less risky than Xiamen Jiarong. It trades about 0.0 of its potential returns per unit of risk. Xiamen Jiarong Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,155  in Xiamen Jiarong Technology on October 24, 2024 and sell it today you would lose (370.00) from holding Xiamen Jiarong Technology or give up 17.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Songz Automobile Air  vs.  Xiamen Jiarong Technology

Songz Automobile Air

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Songz Automobile Air are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Songz Automobile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xiamen Jiarong Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiamen Jiarong Technology 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 Songz Automobile and Xiamen Jiarong

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

The idea behind Songz Automobile Air and Xiamen Jiarong Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.