Correlation Between Jinro Distillers and Microfriend

Can any of the company-specific risk be diversified away by investing in both Jinro Distillers and Microfriend 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 Microfriend 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 Microfriend, you can compare the effects of market volatilities on Jinro Distillers and Microfriend 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 Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinro Distillers and Microfriend.

Diversification Opportunities for Jinro Distillers and Microfriend

0.44

Correlation Coefficient

Jinro Distillers  Microfriend

Very weak diversification

The 3 months correlation between Jinro and Microfriend is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend 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 Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and Microfriend go up and down completely randomly.

Pair Corralation between Jinro Distillers and Microfriend

Assuming the 90 days trading horizon Jinro Distillers is expected to generate 1.68 times less return on investment than Microfriend. But when comparing it to its historical volatility, Jinro Distillers Co is 3.47 times less risky than Microfriend. It trades about 0.31 of its potential returns per unit of risk. Microfriend is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  271,000  in Microfriend on October 7, 2024 and sell it today you would earn a total of  26,500  from holding Microfriend or generate 9.78% return on investment over 90 days.

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

Jinro Distillers Co  vs.  Microfriend

Jinro Distillers

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinro Distillers Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Microfriend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microfriend has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jinro Distillers and Microfriend

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

The idea behind Jinro Distillers Co and Microfriend 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.