Correlation Between Jinlong Machinery and Ingenic Semiconductor

Can any of the company-specific risk be diversified away by investing in both Jinlong Machinery and Ingenic Semiconductor 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 Jinlong Machinery and Ingenic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jinlong Machinery Electronic and Ingenic Semiconductor, you can compare the effects of market volatilities on Jinlong Machinery and Ingenic Semiconductor 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 Jinlong Machinery with a short position of Ingenic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinlong Machinery and Ingenic Semiconductor.

Diversification Opportunities for Jinlong Machinery and Ingenic Semiconductor

0.66

Correlation Coefficient

Jinlong Machinery  Ingenic Semiconductor

Poor diversification

The 3 months correlation between Jinlong and Ingenic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jinlong Machinery Electronic and Ingenic Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingenic Semiconductor and Jinlong Machinery 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 Jinlong Machinery Electronic are associated (or correlated) with Ingenic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingenic Semiconductor has no effect on the direction of Jinlong Machinery i.e., Jinlong Machinery and Ingenic Semiconductor go up and down completely randomly.

Pair Corralation between Jinlong Machinery and Ingenic Semiconductor

Assuming the 90 days trading horizon Jinlong Machinery Electronic is expected to generate 1.08 times more return on investment than Ingenic Semiconductor. However, Jinlong Machinery is 1.08 times more volatile than Ingenic Semiconductor. It trades about -0.09 of its potential returns per unit of risk. Ingenic Semiconductor is currently generating about -0.18 per unit of risk. If you would invest  470.00  in Jinlong Machinery Electronic on October 27, 2024 and sell it today you would lose (31.00) from holding Jinlong Machinery Electronic or give up 6.6% of portfolio value over 90 days.

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

Jinlong Machinery Electronic  vs.  Ingenic Semiconductor

Jinlong Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinlong Machinery Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ingenic Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingenic Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ingenic Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jinlong Machinery and Ingenic Semiconductor

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

The idea behind Jinlong Machinery Electronic and Ingenic Semiconductor 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.