Correlation Between Jinhe Biotechnology and Shenzhen Bioeasy

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

Diversification Opportunities for Jinhe Biotechnology and Shenzhen Bioeasy

0.81

Correlation Coefficient

Jinhe Biotechnology  Shenzhen Bioeasy

Very poor diversification

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

Pair Corralation between Jinhe Biotechnology and Shenzhen Bioeasy

Assuming the 90 days trading horizon Jinhe Biotechnology Co is expected to generate 0.78 times more return on investment than Shenzhen Bioeasy. However, Jinhe Biotechnology Co is 1.28 times less risky than Shenzhen Bioeasy. It trades about 0.06 of its potential returns per unit of risk. Shenzhen Bioeasy Biotechnology is currently generating about 0.01 per unit of risk. If you would invest  449.00  in Jinhe Biotechnology Co on December 26, 2024 and sell it today you would earn a total of  28.00  from holding Jinhe Biotechnology Co or generate 6.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Jinhe Biotechnology Co  vs.  Shenzhen Bioeasy Biotechnology

Jinhe Biotechnology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhe Biotechnology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinhe Biotechnology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shenzhen Bioeasy Bio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Bioeasy Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen Bioeasy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jinhe Biotechnology and Shenzhen Bioeasy

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

The idea behind Jinhe Biotechnology Co and Shenzhen Bioeasy Biotechnology 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.