Correlation Between JA Solar and Cansino Biologics

Can any of the company-specific risk be diversified away by investing in both JA Solar and Cansino Biologics 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 JA Solar and Cansino Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JA Solar Technology and Cansino Biologics, you can compare the effects of market volatilities on JA Solar and Cansino Biologics 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 JA Solar with a short position of Cansino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of JA Solar and Cansino Biologics.

Diversification Opportunities for JA Solar and Cansino Biologics

0.33

Correlation Coefficient

JA Solar  Cansino Biologics

Weak diversification

The 3 months correlation between 002459 and Cansino is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding JA Solar Technology and Cansino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cansino Biologics and JA Solar 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 JA Solar Technology are associated (or correlated) with Cansino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cansino Biologics has no effect on the direction of JA Solar i.e., JA Solar and Cansino Biologics go up and down completely randomly.

Pair Corralation between JA Solar and Cansino Biologics

Assuming the 90 days trading horizon JA Solar Technology is expected to under-perform the Cansino Biologics. But the stock apears to be less risky and, when comparing its historical volatility, JA Solar Technology is 1.18 times less risky than Cansino Biologics. The stock trades about -0.14 of its potential returns per unit of risk. The Cansino Biologics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,628  in Cansino Biologics on October 23, 2024 and sell it today you would earn a total of  136.00  from holding Cansino Biologics or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

JA Solar Technology  vs.  Cansino Biologics

JA Solar Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JA Solar Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cansino Biologics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cansino Biologics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cansino Biologics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JA Solar and Cansino Biologics

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

The idea behind JA Solar Technology and Cansino Biologics 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.