Correlation Between Chenzhou Jingui and Eternal Asia

Can any of the company-specific risk be diversified away by investing in both Chenzhou Jingui and Eternal Asia 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 Chenzhou Jingui and Eternal Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chenzhou Jingui Silver and Eternal Asia Supply, you can compare the effects of market volatilities on Chenzhou Jingui and Eternal Asia 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 Chenzhou Jingui with a short position of Eternal Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenzhou Jingui and Eternal Asia.

Diversification Opportunities for Chenzhou Jingui and Eternal Asia

0.79

Correlation Coefficient

Chenzhou Jingui  Eternal Asia

Poor diversification

The 3 months correlation between Chenzhou and Eternal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chenzhou Jingui Silver and Eternal Asia Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Asia Supply and Chenzhou Jingui 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 Chenzhou Jingui Silver are associated (or correlated) with Eternal Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Asia Supply has no effect on the direction of Chenzhou Jingui i.e., Chenzhou Jingui and Eternal Asia go up and down completely randomly.

Pair Corralation between Chenzhou Jingui and Eternal Asia

Assuming the 90 days trading horizon Chenzhou Jingui is expected to generate 1.13 times less return on investment than Eternal Asia. But when comparing it to its historical volatility, Chenzhou Jingui Silver is 1.74 times less risky than Eternal Asia. It trades about 0.07 of its potential returns per unit of risk. Eternal Asia Supply is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  462.00  in Eternal Asia Supply on December 25, 2024 and sell it today you would earn a total of  25.00  from holding Eternal Asia Supply or generate 5.41% return on investment over 90 days.

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

Chenzhou Jingui Silver  vs.  Eternal Asia Supply

Chenzhou Jingui Silver

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chenzhou Jingui Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chenzhou Jingui may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Eternal Asia Supply

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eternal Asia Supply are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eternal Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chenzhou Jingui and Eternal Asia

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

The idea behind Chenzhou Jingui Silver and Eternal Asia Supply 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.