Correlation Between Jinhe Biotechnology and Soyea Technology

Can any of the company-specific risk be diversified away by investing in both Jinhe Biotechnology and Soyea Technology 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 Jinhe Biotechnology and Soyea Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jinhe Biotechnology Co and Soyea Technology Co, you can compare the effects of market volatilities on Jinhe Biotechnology and Soyea Technology 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 Jinhe Biotechnology with a short position of Soyea Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinhe Biotechnology and Soyea Technology.

Diversification Opportunities for Jinhe Biotechnology and Soyea Technology

0.81

Correlation Coefficient

Jinhe Biotechnology  Soyea Technology

Very poor diversification

The 3 months correlation between Jinhe and Soyea is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Jinhe Biotechnology Co and Soyea Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soyea Technology and Jinhe Biotechnology 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 Jinhe Biotechnology Co are associated (or correlated) with Soyea Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soyea Technology has no effect on the direction of Jinhe Biotechnology i.e., Jinhe Biotechnology and Soyea Technology go up and down completely randomly.

Pair Corralation between Jinhe Biotechnology and Soyea Technology

Assuming the 90 days trading horizon Jinhe Biotechnology Co is expected to generate 0.92 times more return on investment than Soyea Technology. However, Jinhe Biotechnology Co is 1.09 times less risky than Soyea Technology. It trades about -0.35 of its potential returns per unit of risk. Soyea Technology Co is currently generating about -0.52 per unit of risk. If you would invest  486.00  in Jinhe Biotechnology Co on October 14, 2024 and sell it today you would lose (85.00) from holding Jinhe Biotechnology Co or give up 17.49% of portfolio value over 90 days.

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

Jinhe Biotechnology Co  vs.  Soyea Technology Co

Jinhe Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Soyea Technology

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Jinhe Biotechnology and Soyea Technology

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

The idea behind Jinhe Biotechnology Co and Soyea Technology 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.