Correlation Between Xiamen Jihong and Zhejiang Longsheng

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Can any of the company-specific risk be diversified away by investing in both Xiamen Jihong and Zhejiang Longsheng 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 Xiamen Jihong and Zhejiang Longsheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiamen Jihong Package and Zhejiang Longsheng Group, you can compare the effects of market volatilities on Xiamen Jihong and Zhejiang Longsheng 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 Xiamen Jihong with a short position of Zhejiang Longsheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiamen Jihong and Zhejiang Longsheng.

Diversification Opportunities for Xiamen Jihong and Zhejiang Longsheng

XiamenZhejiangDiversified AwayXiamenZhejiangDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Xiamen and Zhejiang is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen Jihong Package and Zhejiang Longsheng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Longsheng and Xiamen Jihong 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 Xiamen Jihong Package are associated (or correlated) with Zhejiang Longsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Longsheng has no effect on the direction of Xiamen Jihong i.e., Xiamen Jihong and Zhejiang Longsheng go up and down completely randomly.

Pair Corralation between Xiamen Jihong and Zhejiang Longsheng

Assuming the 90 days trading horizon Xiamen Jihong Package is expected to generate 2.75 times more return on investment than Zhejiang Longsheng. However, Xiamen Jihong is 2.75 times more volatile than Zhejiang Longsheng Group. It trades about 0.04 of its potential returns per unit of risk. Zhejiang Longsheng Group is currently generating about -0.02 per unit of risk. If you would invest  1,217  in Xiamen Jihong Package on October 21, 2024 and sell it today you would earn a total of  58.00  from holding Xiamen Jihong Package or generate 4.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Xiamen Jihong Package  vs.  Zhejiang Longsheng Group

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030
JavaScript chart by amCharts 3.21.15002803 600352
       Timeline  
Xiamen Jihong Package 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Jihong Package are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Jihong may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1213141516
Zhejiang Longsheng 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zhejiang Longsheng Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhejiang Longsheng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan9.49.69.81010.210.410.610.8

Xiamen Jihong and Zhejiang Longsheng Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.79-8.08-5.37-2.660.02.685.468.2311.0113.79 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15002803 600352
       Returns  

Pair Trading with Xiamen Jihong and Zhejiang Longsheng

The main advantage of trading using opposite Xiamen Jihong and Zhejiang Longsheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiamen Jihong position performs unexpectedly, Zhejiang Longsheng 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 Zhejiang Longsheng will offset losses from the drop in Zhejiang Longsheng's long position.
The idea behind Xiamen Jihong Package and Zhejiang Longsheng Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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