Correlation Between Jinhe Biotechnology and Dawning Information

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

Diversification Opportunities for Jinhe Biotechnology and Dawning Information

0.49

Correlation Coefficient

Jinhe Biotechnology  Dawning Information

Very weak diversification

The 3 months correlation between Jinhe and Dawning is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Jinhe Biotechnology Co and Dawning Information Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawning Information 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 Dawning Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawning Information has no effect on the direction of Jinhe Biotechnology i.e., Jinhe Biotechnology and Dawning Information go up and down completely randomly.

Pair Corralation between Jinhe Biotechnology and Dawning Information

Assuming the 90 days trading horizon Jinhe Biotechnology Co is expected to under-perform the Dawning Information. But the stock apears to be less risky and, when comparing its historical volatility, Jinhe Biotechnology Co is 1.61 times less risky than Dawning Information. The stock trades about -0.01 of its potential returns per unit of risk. The Dawning Information Industry is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,423  in Dawning Information Industry on October 26, 2024 and sell it today you would earn a total of  1,129  from holding Dawning Information Industry or generate 20.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Jinhe Biotechnology Co  vs.  Dawning Information Industry

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.

Dawning Information

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dawning Information Industry are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dawning Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinhe Biotechnology and Dawning Information

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

The idea behind Jinhe Biotechnology Co and Dawning Information Industry 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.