Correlation Between Jiangxi Selon and Shengtak New

Can any of the company-specific risk be diversified away by investing in both Jiangxi Selon and Shengtak New 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 Jiangxi Selon and Shengtak New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangxi Selon Industrial and Shengtak New Material, you can compare the effects of market volatilities on Jiangxi Selon and Shengtak New 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 Jiangxi Selon with a short position of Shengtak New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Selon and Shengtak New.

Diversification Opportunities for Jiangxi Selon and Shengtak New

-0.11

Correlation Coefficient

Jiangxi Selon  Shengtak New

Good diversification

The 3 months correlation between Jiangxi and Shengtak is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Selon Industrial and Shengtak New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengtak New Material and Jiangxi Selon 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 Jiangxi Selon Industrial are associated (or correlated) with Shengtak New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengtak New Material has no effect on the direction of Jiangxi Selon i.e., Jiangxi Selon and Shengtak New go up and down completely randomly.

Pair Corralation between Jiangxi Selon and Shengtak New

Assuming the 90 days trading horizon Jiangxi Selon Industrial is expected to under-perform the Shengtak New. But the stock apears to be less risky and, when comparing its historical volatility, Jiangxi Selon Industrial is 1.19 times less risky than Shengtak New. The stock trades about -0.01 of its potential returns per unit of risk. The Shengtak New Material is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,430  in Shengtak New Material on October 2, 2024 and sell it today you would earn a total of  644.00  from holding Shengtak New Material or generate 26.5% return on investment over 90 days.

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

Jiangxi Selon Industrial  vs.  Shengtak New Material

Jiangxi Selon Industrial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Selon Industrial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Selon sustained solid returns over the last few months and may actually be approaching a breakup point.

Shengtak New Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengtak New Material 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jiangxi Selon and Shengtak New

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

The idea behind Jiangxi Selon Industrial and Shengtak New Material 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..