Correlation Between Jinro Distillers and FNSTech

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

By analyzing existing cross correlation between Jinro Distillers Co and FNSTech Co, you can compare the effects of market volatilities on Jinro Distillers and FNSTech 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 Jinro Distillers with a short position of FNSTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinro Distillers and FNSTech.

Diversification Opportunities for Jinro Distillers and FNSTech

0.5

Correlation Coefficient

Jinro Distillers  FNSTech

Very weak diversification

The 3 months correlation between Jinro and FNSTech is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech and Jinro Distillers 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 Jinro Distillers Co are associated (or correlated) with FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and FNSTech go up and down completely randomly.

Pair Corralation between Jinro Distillers and FNSTech

Assuming the 90 days trading horizon Jinro Distillers is expected to generate 15.28 times less return on investment than FNSTech. But when comparing it to its historical volatility, Jinro Distillers Co is 8.41 times less risky than FNSTech. It trades about 0.24 of its potential returns per unit of risk. FNSTech Co is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  770,000  in FNSTech Co on October 25, 2024 and sell it today you would earn a total of  316,000  from holding FNSTech Co or generate 41.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Jinro Distillers Co  vs.  FNSTech Co

Jinro Distillers

Risk-Adjusted Performance

0 of 100

Very Weak

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

FNSTech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FNSTech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FNSTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinro Distillers and FNSTech

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

The idea behind Jinro Distillers Co and FNSTech Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.