Correlation Between Jinhe Biotechnology and Shandong Sino

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

Diversification Opportunities for Jinhe Biotechnology and Shandong Sino

0.44

Correlation Coefficient

Jinhe Biotechnology  Shandong Sino

Very weak diversification

The 3 months correlation between Jinhe and Shandong is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jinhe Biotechnology Co and Shandong Sino Agri United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sino Agri 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 Shandong Sino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sino Agri has no effect on the direction of Jinhe Biotechnology i.e., Jinhe Biotechnology and Shandong Sino go up and down completely randomly.

Pair Corralation between Jinhe Biotechnology and Shandong Sino

Assuming the 90 days trading horizon Jinhe Biotechnology Co is expected to generate 0.74 times more return on investment than Shandong Sino. However, Jinhe Biotechnology Co is 1.36 times less risky than Shandong Sino. It trades about 0.02 of its potential returns per unit of risk. Shandong Sino Agri United is currently generating about -0.08 per unit of risk. If you would invest  434.00  in Jinhe Biotechnology Co on December 1, 2024 and sell it today you would earn a total of  2.00  from holding Jinhe Biotechnology Co or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Jinhe Biotechnology Co  vs.  Shandong Sino Agri United

Jinhe Biotechnology

Risk-Adjusted Performance

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.

Shandong Sino Agri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Sino Agri United has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jinhe Biotechnology and Shandong Sino

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

The idea behind Jinhe Biotechnology Co and Shandong Sino Agri United 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.