Correlation Between Yi Jinn and Ji Haw

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

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

Diversification Opportunities for Yi Jinn and Ji Haw

-0.14

Correlation Coefficient

Yi Jinn  Ji Haw

Good diversification

The 3 months correlation between 1457 and 3011 is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Yi Jinn Industrial and Ji Haw Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ji Haw Industrial and Yi Jinn 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 Yi Jinn Industrial are associated (or correlated) with Ji Haw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ji Haw Industrial has no effect on the direction of Yi Jinn i.e., Yi Jinn and Ji Haw go up and down completely randomly.

Pair Corralation between Yi Jinn and Ji Haw

Assuming the 90 days trading horizon Yi Jinn is expected to generate 6.04 times less return on investment than Ji Haw. But when comparing it to its historical volatility, Yi Jinn Industrial is 2.21 times less risky than Ji Haw. It trades about 0.02 of its potential returns per unit of risk. Ji Haw Industrial Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,760  in Ji Haw Industrial Co on September 16, 2024 and sell it today you would earn a total of  950.00  from holding Ji Haw Industrial Co or generate 53.98% return on investment over 90 days.

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

Yi Jinn Industrial  vs.  Ji Haw Industrial Co

Yi Jinn Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ji Haw Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yi Jinn and Ji Haw

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

The idea behind Yi Jinn Industrial and Ji Haw Industrial 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.