Correlation Between Jinlong Machinery and Allgens Medical

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

Diversification Opportunities for Jinlong Machinery and Allgens Medical

0.34

Correlation Coefficient

Jinlong Machinery  Allgens Medical

Weak diversification

The 3 months correlation between Jinlong and Allgens is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Jinlong Machinery Electronic and Allgens Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allgens Medical Tech 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 Allgens Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allgens Medical Tech has no effect on the direction of Jinlong Machinery i.e., Jinlong Machinery and Allgens Medical go up and down completely randomly.

Pair Corralation between Jinlong Machinery and Allgens Medical

Assuming the 90 days trading horizon Jinlong Machinery Electronic is expected to generate 1.81 times more return on investment than Allgens Medical. However, Jinlong Machinery is 1.81 times more volatile than Allgens Medical Technology. It trades about 0.05 of its potential returns per unit of risk. Allgens Medical Technology is currently generating about 0.05 per unit of risk. If you would invest  401.00  in Jinlong Machinery Electronic on October 11, 2024 and sell it today you would earn a total of  37.00  from holding Jinlong Machinery Electronic or generate 9.23% return on investment over 90 days.

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

Jinlong Machinery Electronic  vs.  Allgens Medical Technology

Jinlong Machinery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinlong Machinery Electronic are ranked lower than 4 (%) 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.

Allgens Medical Tech

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Jinlong Machinery and Allgens Medical

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

The idea behind Jinlong Machinery Electronic and Allgens Medical Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.