Correlation Between TOPBI International and Jinli Group

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

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

Diversification Opportunities for TOPBI International and Jinli Group

0.83

Correlation Coefficient

TOPBI International  Jinli Group

Very poor diversification

The 3 months correlation between TOPBI and Jinli is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TOPBI International Holdings 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 TOPBI International 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 TOPBI International Holdings 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 TOPBI International i.e., TOPBI International and Jinli Group go up and down completely randomly.

Pair Corralation between TOPBI International and Jinli Group

Assuming the 90 days trading horizon TOPBI International Holdings is expected to generate 0.83 times more return on investment than Jinli Group. However, TOPBI International Holdings is 1.21 times less risky than Jinli Group. It trades about 0.19 of its potential returns per unit of risk. Jinli Group Holdings is currently generating about -0.01 per unit of risk. If you would invest  1,355  in TOPBI International Holdings on September 25, 2024 and sell it today you would earn a total of  155.00  from holding TOPBI International Holdings or generate 11.44% return on investment over 90 days.

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

TOPBI International Holdings  vs.  Jinli Group Holdings

TOPBI International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TOPBI International Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TOPBI International showed solid returns over the last few months and may actually be approaching a breakup point.

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 TOPBI International and Jinli Group

The main advantage of trading using opposite TOPBI International and Jinli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPBI International 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 TOPBI International Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.