Correlation Between Jinlong Machinery and Fujian Boss

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

Diversification Opportunities for Jinlong Machinery and Fujian Boss

0.44

Correlation Coefficient

Jinlong Machinery  Fujian Boss

Very weak diversification

The 3 months correlation between Jinlong and Fujian is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jinlong Machinery Electronic and Fujian Boss Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Boss Software 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 Fujian Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Boss Software has no effect on the direction of Jinlong Machinery i.e., Jinlong Machinery and Fujian Boss go up and down completely randomly.

Pair Corralation between Jinlong Machinery and Fujian Boss

Assuming the 90 days trading horizon Jinlong Machinery Electronic is expected to under-perform the Fujian Boss. But the stock apears to be less risky and, when comparing its historical volatility, Jinlong Machinery Electronic is 1.45 times less risky than Fujian Boss. The stock trades about -0.01 of its potential returns per unit of risk. The Fujian Boss Software is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Fujian Boss Software on December 22, 2024 and sell it today you would earn a total of  102.00  from holding Fujian Boss Software or generate 6.16% return on investment over 90 days.

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

Jinlong Machinery Electronic  vs.  Fujian Boss Software

Jinlong Machinery

Risk-Adjusted Performance

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 somewhat strong basic indicators, Jinlong Machinery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fujian Boss Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Boss Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Boss may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jinlong Machinery and Fujian Boss

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

The idea behind Jinlong Machinery Electronic and Fujian Boss Software 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.