Correlation Between Jinlong Machinery and Bingo Software

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

Diversification Opportunities for Jinlong Machinery and Bingo Software

0.01

Correlation Coefficient

Jinlong Machinery  Bingo Software

Significant diversification

The 3 months correlation between Jinlong and Bingo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Jinlong Machinery Electronic and Bingo Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bingo 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 Bingo Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bingo Software has no effect on the direction of Jinlong Machinery i.e., Jinlong Machinery and Bingo Software go up and down completely randomly.

Pair Corralation between Jinlong Machinery and Bingo Software

Assuming the 90 days trading horizon Jinlong Machinery Electronic is expected to under-perform the Bingo Software. But the stock apears to be less risky and, when comparing its historical volatility, Jinlong Machinery Electronic is 1.17 times less risky than Bingo Software. The stock trades about -0.14 of its potential returns per unit of risk. The Bingo Software Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,948  in Bingo Software Co on October 26, 2024 and sell it today you would earn a total of  688.00  from holding Bingo Software Co or generate 35.32% return on investment over 90 days.

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

Jinlong Machinery Electronic  vs.  Bingo Software Co

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.

Bingo Software

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bingo Software Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bingo Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinlong Machinery and Bingo Software

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

The idea behind Jinlong Machinery Electronic and Bingo Software Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.