Correlation Between Jinzai Food and Shenyang Huitian

Can any of the company-specific risk be diversified away by investing in both Jinzai Food and Shenyang Huitian 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 Jinzai Food and Shenyang Huitian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jinzai Food Group and Shenyang Huitian Thermal, you can compare the effects of market volatilities on Jinzai Food and Shenyang Huitian 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 Jinzai Food with a short position of Shenyang Huitian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinzai Food and Shenyang Huitian.

Diversification Opportunities for Jinzai Food and Shenyang Huitian

-0.22

Correlation Coefficient

Jinzai Food  Shenyang Huitian

Very good diversification

The 3 months correlation between Jinzai and Shenyang is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jinzai Food Group and Shenyang Huitian Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Huitian Thermal and Jinzai Food 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 Jinzai Food Group are associated (or correlated) with Shenyang Huitian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Huitian Thermal has no effect on the direction of Jinzai Food i.e., Jinzai Food and Shenyang Huitian go up and down completely randomly.

Pair Corralation between Jinzai Food and Shenyang Huitian

Assuming the 90 days trading horizon Jinzai Food Group is expected to generate 0.67 times more return on investment than Shenyang Huitian. However, Jinzai Food Group is 1.49 times less risky than Shenyang Huitian. It trades about 0.08 of its potential returns per unit of risk. Shenyang Huitian Thermal is currently generating about -0.11 per unit of risk. If you would invest  1,288  in Jinzai Food Group on October 10, 2024 and sell it today you would earn a total of  54.00  from holding Jinzai Food Group or generate 4.19% return on investment over 90 days.

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

Jinzai Food Group  vs.  Shenyang Huitian Thermal

Jinzai Food Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jinzai Food Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jinzai Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenyang Huitian Thermal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenyang Huitian Thermal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenyang Huitian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinzai Food and Shenyang Huitian

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

The idea behind Jinzai Food Group and Shenyang Huitian Thermal 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.