Correlation Between Jinlong Machinery and Porton Fine

Can any of the company-specific risk be diversified away by investing in both Jinlong Machinery and Porton Fine 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 Porton Fine 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 Porton Fine Chemicals, you can compare the effects of market volatilities on Jinlong Machinery and Porton Fine 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 Porton Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinlong Machinery and Porton Fine.

Diversification Opportunities for Jinlong Machinery and Porton Fine

0.81

Correlation Coefficient

Jinlong Machinery  Porton Fine

Very poor diversification

The 3 months correlation between Jinlong and Porton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Jinlong Machinery Electronic and Porton Fine Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porton Fine Chemicals 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 Porton Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porton Fine Chemicals has no effect on the direction of Jinlong Machinery i.e., Jinlong Machinery and Porton Fine go up and down completely randomly.

Pair Corralation between Jinlong Machinery and Porton Fine

Assuming the 90 days trading horizon Jinlong Machinery Electronic is expected to generate 1.18 times more return on investment than Porton Fine. However, Jinlong Machinery is 1.18 times more volatile than Porton Fine Chemicals. It trades about 0.01 of its potential returns per unit of risk. Porton Fine Chemicals is currently generating about -0.05 per unit of risk. If you would invest  520.00  in Jinlong Machinery Electronic on October 11, 2024 and sell it today you would lose (89.00) from holding Jinlong Machinery Electronic or give up 17.12% of portfolio value over 90 days.

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

Jinlong Machinery Electronic  vs.  Porton Fine Chemicals

Jinlong Machinery

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jinlong Machinery Electronic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinlong Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Porton Fine Chemicals

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Porton Fine Chemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Porton Fine 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 Porton Fine

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

The idea behind Jinlong Machinery Electronic and Porton Fine Chemicals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.