Correlation Between Tainan Enterprises and Jinli Group

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

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

Diversification Opportunities for Tainan Enterprises and Jinli Group

-0.11

Correlation Coefficient

Tainan Enterprises  Jinli Group

Good diversification

The 3 months correlation between Tainan and Jinli is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Enterprises Co 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 Tainan Enterprises 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 Tainan Enterprises Co 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 Tainan Enterprises i.e., Tainan Enterprises and Jinli Group go up and down completely randomly.

Pair Corralation between Tainan Enterprises and Jinli Group

Assuming the 90 days trading horizon Tainan Enterprises Co is expected to generate 1.22 times more return on investment than Jinli Group. However, Tainan Enterprises is 1.22 times more volatile than Jinli Group Holdings. It trades about 0.05 of its potential returns per unit of risk. Jinli Group Holdings is currently generating about 0.0 per unit of risk. If you would invest  2,120  in Tainan Enterprises Co on October 13, 2024 and sell it today you would earn a total of  1,260  from holding Tainan Enterprises Co or generate 59.43% return on investment over 90 days.

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

Tainan Enterprises Co  vs.  Jinli Group Holdings

Tainan Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tainan Enterprises Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Jinli Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinli Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Tainan Enterprises and Jinli Group

The main advantage of trading using opposite Tainan Enterprises and Jinli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Enterprises 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 Tainan Enterprises Co 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.