Correlation Between Jiangsu Xinning and Cultural Investment

Can any of the company-specific risk be diversified away by investing in both Jiangsu Xinning and Cultural Investment 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 Jiangsu Xinning and Cultural Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangsu Xinning Modern and Cultural Investment Holdings, you can compare the effects of market volatilities on Jiangsu Xinning and Cultural Investment 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 Jiangsu Xinning with a short position of Cultural Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Xinning and Cultural Investment.

Diversification Opportunities for Jiangsu Xinning and Cultural Investment

0.84

Correlation Coefficient

Jiangsu Xinning  Cultural Investment

Very poor diversification

The 3 months correlation between Jiangsu and Cultural is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Xinning Modern and Cultural Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cultural Investment and Jiangsu Xinning 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 Jiangsu Xinning Modern are associated (or correlated) with Cultural Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cultural Investment has no effect on the direction of Jiangsu Xinning i.e., Jiangsu Xinning and Cultural Investment go up and down completely randomly.

Pair Corralation between Jiangsu Xinning and Cultural Investment

Assuming the 90 days trading horizon Jiangsu Xinning Modern is expected to generate 1.48 times more return on investment than Cultural Investment. However, Jiangsu Xinning is 1.48 times more volatile than Cultural Investment Holdings. It trades about 0.26 of its potential returns per unit of risk. Cultural Investment Holdings is currently generating about 0.15 per unit of risk. If you would invest  220.00  in Jiangsu Xinning Modern on September 15, 2024 and sell it today you would earn a total of  189.00  from holding Jiangsu Xinning Modern or generate 85.91% return on investment over 90 days.

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

Jiangsu Xinning Modern  vs.  Cultural Investment Holdings

Jiangsu Xinning Modern

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Xinning Modern are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Xinning sustained solid returns over the last few months and may actually be approaching a breakup point.

Cultural Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangsu Xinning and Cultural Investment

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

The idea behind Jiangsu Xinning Modern and Cultural Investment 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.