Correlation Between Elite Color and JCHX Mining

Can any of the company-specific risk be diversified away by investing in both Elite Color and JCHX Mining 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 Elite Color and JCHX Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elite Color Environmental and JCHX Mining Management, you can compare the effects of market volatilities on Elite Color and JCHX Mining 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 Elite Color with a short position of JCHX Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Color and JCHX Mining.

Diversification Opportunities for Elite Color and JCHX Mining

0.03

Correlation Coefficient

Elite Color  JCHX Mining

Significant diversification

The 3 months correlation between Elite and JCHX is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Elite Color Environmental and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management and Elite Color 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 Elite Color Environmental are associated (or correlated) with JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Elite Color i.e., Elite Color and JCHX Mining go up and down completely randomly.

Pair Corralation between Elite Color and JCHX Mining

Assuming the 90 days trading horizon Elite Color is expected to generate 3.25 times less return on investment than JCHX Mining. But when comparing it to its historical volatility, Elite Color Environmental is 1.05 times less risky than JCHX Mining. It trades about 0.02 of its potential returns per unit of risk. JCHX Mining Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,562  in JCHX Mining Management on September 19, 2024 and sell it today you would earn a total of  1,348  from holding JCHX Mining Management or generate 52.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Elite Color Environmental  vs.  JCHX Mining Management

Elite Color Environmental

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Color Environmental are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elite Color sustained solid returns over the last few months and may actually be approaching a breakup point.

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Elite Color and JCHX Mining

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

The idea behind Elite Color Environmental and JCHX Mining Management 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.