Correlation Between Haoxiangni Jujube and Jizhong Energy

Can any of the company-specific risk be diversified away by investing in both Haoxiangni Jujube and Jizhong Energy 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 Haoxiangni Jujube and Jizhong Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haoxiangni Jujube Co and Jizhong Energy Resources, you can compare the effects of market volatilities on Haoxiangni Jujube and Jizhong Energy 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 Haoxiangni Jujube with a short position of Jizhong Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haoxiangni Jujube and Jizhong Energy.

Diversification Opportunities for Haoxiangni Jujube and Jizhong Energy

0.59

Correlation Coefficient

Haoxiangni Jujube  Jizhong Energy

Very weak diversification

The 3 months correlation between Haoxiangni and Jizhong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Haoxiangni Jujube Co and Jizhong Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jizhong Energy Resources and Haoxiangni Jujube 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 Haoxiangni Jujube Co are associated (or correlated) with Jizhong Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jizhong Energy Resources has no effect on the direction of Haoxiangni Jujube i.e., Haoxiangni Jujube and Jizhong Energy go up and down completely randomly.

Pair Corralation between Haoxiangni Jujube and Jizhong Energy

Assuming the 90 days trading horizon Haoxiangni Jujube Co is expected to generate 3.2 times more return on investment than Jizhong Energy. However, Haoxiangni Jujube is 3.2 times more volatile than Jizhong Energy Resources. It trades about 0.14 of its potential returns per unit of risk. Jizhong Energy Resources is currently generating about 0.02 per unit of risk. If you would invest  682.00  in Haoxiangni Jujube Co on October 8, 2024 and sell it today you would earn a total of  204.00  from holding Haoxiangni Jujube Co or generate 29.91% return on investment over 90 days.

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

Haoxiangni Jujube Co  vs.  Jizhong Energy Resources

Haoxiangni Jujube

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haoxiangni Jujube Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haoxiangni Jujube sustained solid returns over the last few months and may actually be approaching a breakup point.

Jizhong Energy Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Haoxiangni Jujube and Jizhong Energy

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

The idea behind Haoxiangni Jujube Co and Jizhong Energy Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.