Correlation Between Tah Hsin and Jinli Group

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

By analyzing existing cross correlation between Tah Hsin Industrial and Jinli Group Holdings, you can compare the effects of market volatilities on Tah Hsin and Jinli Group 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 Tah Hsin with a short position of Jinli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tah Hsin and Jinli Group.

Diversification Opportunities for Tah Hsin and Jinli Group

-0.13

Correlation Coefficient

Tah Hsin  Jinli Group

Good diversification

The 3 months correlation between Tah and Jinli is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Tah Hsin Industrial and Jinli Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinli Group Holdings and Tah Hsin 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 Tah Hsin Industrial are associated (or correlated) with Jinli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinli Group Holdings has no effect on the direction of Tah Hsin i.e., Tah Hsin and Jinli Group go up and down completely randomly.

Pair Corralation between Tah Hsin and Jinli Group

Assuming the 90 days trading horizon Tah Hsin Industrial is expected to under-perform the Jinli Group. But the stock apears to be less risky and, when comparing its historical volatility, Tah Hsin Industrial is 11.06 times less risky than Jinli Group. The stock trades about -0.16 of its potential returns per unit of risk. The Jinli Group Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,225  in Jinli Group Holdings on September 25, 2024 and sell it today you would lose (25.00) from holding Jinli Group Holdings or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Tah Hsin Industrial  vs.  Jinli Group Holdings

Tah Hsin Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tah Hsin Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tah Hsin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jinli Group Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jinli Group Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jinli Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tah Hsin and Jinli Group

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

The idea behind Tah Hsin Industrial and Jinli Group Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.