Correlation Between Jiajia Food and Nanjing Putian

Can any of the company-specific risk be diversified away by investing in both Jiajia Food and Nanjing Putian 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 Jiajia Food and Nanjing Putian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiajia Food Group and Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Jiajia Food and Nanjing Putian 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 Jiajia Food with a short position of Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiajia Food and Nanjing Putian.

Diversification Opportunities for Jiajia Food and Nanjing Putian

0.54

Correlation Coefficient

Jiajia Food  Nanjing Putian

Very weak diversification

The 3 months correlation between Jiajia and Nanjing is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Jiajia Food Group and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec and Jiajia Food 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 Jiajia Food Group are associated (or correlated) with Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Jiajia Food i.e., Jiajia Food and Nanjing Putian go up and down completely randomly.

Pair Corralation between Jiajia Food and Nanjing Putian

Assuming the 90 days trading horizon Jiajia Food Group is expected to generate 0.83 times more return on investment than Nanjing Putian. However, Jiajia Food Group is 1.21 times less risky than Nanjing Putian. It trades about 0.3 of its potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about 0.09 per unit of risk. If you would invest  239.00  in Jiajia Food Group on October 20, 2024 and sell it today you would earn a total of  236.00  from holding Jiajia Food Group or generate 98.74% return on investment over 90 days.

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

Jiajia Food Group  vs.  Nanjing Putian Telecommunicati

Jiajia Food Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jiajia Food Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiajia Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Nanjing Putian Telec

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Putian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiajia Food and Nanjing Putian

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

The idea behind Jiajia Food Group and Nanjing Putian Telecommunications 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.