Correlation Between Tongxing Environmental and Jonjee Hi

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

Diversification Opportunities for Tongxing Environmental and Jonjee Hi

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tongxing and Jonjee is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Jonjee Hi tech Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jonjee Hi tech and Tongxing Environmental 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 Tongxing Environmental Protection are associated (or correlated) with Jonjee Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jonjee Hi tech has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Jonjee Hi go up and down completely randomly.

Pair Corralation between Tongxing Environmental and Jonjee Hi

Assuming the 90 days trading horizon Tongxing Environmental Protection is expected to generate 2.48 times more return on investment than Jonjee Hi. However, Tongxing Environmental is 2.48 times more volatile than Jonjee Hi tech Industrial. It trades about -0.04 of its potential returns per unit of risk. Jonjee Hi tech Industrial is currently generating about -0.17 per unit of risk. If you would invest  1,573  in Tongxing Environmental Protection on October 5, 2024 and sell it today you would lose (70.00) from holding Tongxing Environmental Protection or give up 4.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tongxing Environmental Protect  vs.  Jonjee Hi tech Industrial

 Performance 
       Timeline  
Tongxing Environmental 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Tongxing Environmental Protection are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tongxing Environmental may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Jonjee Hi tech 

Risk-Adjusted Performance

0 of 100

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

Tongxing Environmental and Jonjee Hi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tongxing Environmental and Jonjee Hi

The main advantage of trading using opposite Tongxing Environmental and Jonjee Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongxing Environmental position performs unexpectedly, Jonjee Hi 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 Jonjee Hi will offset losses from the drop in Jonjee Hi's long position.
The idea behind Tongxing Environmental Protection and Jonjee Hi tech Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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