Correlation Between Jinhe Biotechnology and Xiamen Jihong

Can any of the company-specific risk be diversified away by investing in both Jinhe Biotechnology and Xiamen Jihong 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 Xiamen Jihong 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 Xiamen Jihong Package, you can compare the effects of market volatilities on Jinhe Biotechnology and Xiamen Jihong 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 Xiamen Jihong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinhe Biotechnology and Xiamen Jihong.

Diversification Opportunities for Jinhe Biotechnology and Xiamen Jihong

0.78

Correlation Coefficient

Jinhe Biotechnology  Xiamen Jihong

Poor diversification

The 3 months correlation between Jinhe and Xiamen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jinhe Biotechnology Co and Xiamen Jihong Package in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Jihong Package 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 Xiamen Jihong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Jihong Package has no effect on the direction of Jinhe Biotechnology i.e., Jinhe Biotechnology and Xiamen Jihong go up and down completely randomly.

Pair Corralation between Jinhe Biotechnology and Xiamen Jihong

Assuming the 90 days trading horizon Jinhe Biotechnology Co is expected to generate 0.75 times more return on investment than Xiamen Jihong. However, Jinhe Biotechnology Co is 1.34 times less risky than Xiamen Jihong. It trades about -0.17 of its potential returns per unit of risk. Xiamen Jihong Package is currently generating about -0.32 per unit of risk. If you would invest  465.00  in Jinhe Biotechnology Co on October 11, 2024 and sell it today you would lose (46.00) from holding Jinhe Biotechnology Co or give up 9.89% of portfolio value over 90 days.

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

Jinhe Biotechnology Co  vs.  Xiamen Jihong Package

Jinhe Biotechnology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhe Biotechnology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Xiamen Jihong Package

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Jihong Package are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Jihong may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jinhe Biotechnology and Xiamen Jihong

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

The idea behind Jinhe Biotechnology Co and Xiamen Jihong Package 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.