Correlation Between Guangzhou Jointas and Fujian Anjoy

Can any of the company-specific risk be diversified away by investing in both Guangzhou Jointas and Fujian Anjoy 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 Guangzhou Jointas and Fujian Anjoy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangzhou Jointas Chemical and Fujian Anjoy Foods, you can compare the effects of market volatilities on Guangzhou Jointas and Fujian Anjoy 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 Guangzhou Jointas with a short position of Fujian Anjoy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Jointas and Fujian Anjoy.

Diversification Opportunities for Guangzhou Jointas and Fujian Anjoy

0.27

Correlation Coefficient

Guangzhou Jointas  Fujian Anjoy

Modest diversification

The 3 months correlation between Guangzhou and Fujian is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Jointas Chemical and Fujian Anjoy Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Anjoy Foods and Guangzhou Jointas 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 Guangzhou Jointas Chemical are associated (or correlated) with Fujian Anjoy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Anjoy Foods has no effect on the direction of Guangzhou Jointas i.e., Guangzhou Jointas and Fujian Anjoy go up and down completely randomly.

Pair Corralation between Guangzhou Jointas and Fujian Anjoy

Assuming the 90 days trading horizon Guangzhou Jointas Chemical is expected to generate 1.12 times more return on investment than Fujian Anjoy. However, Guangzhou Jointas is 1.12 times more volatile than Fujian Anjoy Foods. It trades about 0.14 of its potential returns per unit of risk. Fujian Anjoy Foods is currently generating about -0.01 per unit of risk. If you would invest  515.00  in Guangzhou Jointas Chemical on December 27, 2024 and sell it today you would earn a total of  81.00  from holding Guangzhou Jointas Chemical or generate 15.73% return on investment over 90 days.

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

Guangzhou Jointas Chemical  vs.  Fujian Anjoy Foods

Guangzhou Jointas

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Jointas Chemical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Jointas sustained solid returns over the last few months and may actually be approaching a breakup point.

Fujian Anjoy Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fujian Anjoy Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fujian Anjoy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guangzhou Jointas and Fujian Anjoy

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

The idea behind Guangzhou Jointas Chemical and Fujian Anjoy Foods 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.