Correlation Between Jiajia Food and Hubei Geoway

Can any of the company-specific risk be diversified away by investing in both Jiajia Food and Hubei Geoway 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 Hubei Geoway 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 Hubei Geoway Investment, you can compare the effects of market volatilities on Jiajia Food and Hubei Geoway 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 Hubei Geoway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiajia Food and Hubei Geoway.

Diversification Opportunities for Jiajia Food and Hubei Geoway

0.7

Correlation Coefficient

Jiajia Food  Hubei Geoway

Poor diversification

The 3 months correlation between Jiajia and Hubei is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jiajia Food Group and Hubei Geoway Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Geoway Investment 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 Hubei Geoway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Geoway Investment has no effect on the direction of Jiajia Food i.e., Jiajia Food and Hubei Geoway go up and down completely randomly.

Pair Corralation between Jiajia Food and Hubei Geoway

Assuming the 90 days trading horizon Jiajia Food Group is expected to generate 1.05 times more return on investment than Hubei Geoway. However, Jiajia Food is 1.05 times more volatile than Hubei Geoway Investment. It trades about 0.02 of its potential returns per unit of risk. Hubei Geoway Investment is currently generating about 0.0 per unit of risk. If you would invest  462.00  in Jiajia Food Group on September 20, 2024 and sell it today you would earn a total of  47.00  from holding Jiajia Food Group or generate 10.17% return on investment over 90 days.

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

Jiajia Food Group  vs.  Hubei Geoway Investment

Jiajia Food Group

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Jiajia Food Group are ranked lower than 30 (%) 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.

Hubei Geoway Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Geoway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiajia Food and Hubei Geoway

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

The idea behind Jiajia Food Group and Hubei Geoway Investment 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.