Correlation Between Jiangxi Hengda and Guangdong Cellwise

Can any of the company-specific risk be diversified away by investing in both Jiangxi Hengda and Guangdong Cellwise 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 Jiangxi Hengda and Guangdong Cellwise into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangxi Hengda Hi Tech and Guangdong Cellwise Microelectronics, you can compare the effects of market volatilities on Jiangxi Hengda and Guangdong Cellwise 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 Jiangxi Hengda with a short position of Guangdong Cellwise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Hengda and Guangdong Cellwise.

Diversification Opportunities for Jiangxi Hengda and Guangdong Cellwise

0.41

Correlation Coefficient

Jiangxi Hengda  Guangdong Cellwise

Very weak diversification

The 3 months correlation between Jiangxi and Guangdong is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Hengda Hi Tech and Guangdong Cellwise Microelectr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Cellwise and Jiangxi Hengda 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 Jiangxi Hengda Hi Tech are associated (or correlated) with Guangdong Cellwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Cellwise has no effect on the direction of Jiangxi Hengda i.e., Jiangxi Hengda and Guangdong Cellwise go up and down completely randomly.

Pair Corralation between Jiangxi Hengda and Guangdong Cellwise

Assuming the 90 days trading horizon Jiangxi Hengda Hi Tech is expected to under-perform the Guangdong Cellwise. But the stock apears to be less risky and, when comparing its historical volatility, Jiangxi Hengda Hi Tech is 1.14 times less risky than Guangdong Cellwise. The stock trades about -0.02 of its potential returns per unit of risk. The Guangdong Cellwise Microelectronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,914  in Guangdong Cellwise Microelectronics on October 13, 2024 and sell it today you would lose (393.00) from holding Guangdong Cellwise Microelectronics or give up 8.0% of portfolio value over 90 days.

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

Jiangxi Hengda Hi Tech  vs.  Guangdong Cellwise Microelectr

Jiangxi Hengda Hi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guangdong Cellwise

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jiangxi Hengda and Guangdong Cellwise

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

The idea behind Jiangxi Hengda Hi Tech and Guangdong Cellwise Microelectronics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.