Correlation Between Tongding Interconnection and JuneYao Dairy

Can any of the company-specific risk be diversified away by investing in both Tongding Interconnection and JuneYao Dairy 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 Tongding Interconnection and JuneYao Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tongding Interconnection Information and JuneYao Dairy Co, you can compare the effects of market volatilities on Tongding Interconnection and JuneYao Dairy 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 Tongding Interconnection with a short position of JuneYao Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongding Interconnection and JuneYao Dairy.

Diversification Opportunities for Tongding Interconnection and JuneYao Dairy

0.24

Correlation Coefficient

Tongding Interconnection  JuneYao Dairy

Modest diversification

The 3 months correlation between Tongding and JuneYao is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Tongding Interconnection Infor and JuneYao Dairy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JuneYao Dairy and Tongding Interconnection 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 Tongding Interconnection Information are associated (or correlated) with JuneYao Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JuneYao Dairy has no effect on the direction of Tongding Interconnection i.e., Tongding Interconnection and JuneYao Dairy go up and down completely randomly.

Pair Corralation between Tongding Interconnection and JuneYao Dairy

Assuming the 90 days trading horizon Tongding Interconnection Information is expected to generate 1.43 times more return on investment than JuneYao Dairy. However, Tongding Interconnection is 1.43 times more volatile than JuneYao Dairy Co. It trades about 0.04 of its potential returns per unit of risk. JuneYao Dairy Co is currently generating about -0.08 per unit of risk. If you would invest  470.00  in Tongding Interconnection Information on December 2, 2024 and sell it today you would earn a total of  26.00  from holding Tongding Interconnection Information or generate 5.53% return on investment over 90 days.

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

Tongding Interconnection Infor  vs.  JuneYao Dairy Co

Tongding Interconnection

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tongding Interconnection Information are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tongding Interconnection may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JuneYao Dairy

Risk-Adjusted Performance

Very Weak

Over the last 90 days JuneYao Dairy Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tongding Interconnection and JuneYao Dairy

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

The idea behind Tongding Interconnection Information and JuneYao Dairy Co 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.