Correlation Between Jiangsu Hoperun and OBiO Technology

Can any of the company-specific risk be diversified away by investing in both Jiangsu Hoperun and OBiO Technology 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 Jiangsu Hoperun and OBiO Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangsu Hoperun Software and OBiO Technology Corp, you can compare the effects of market volatilities on Jiangsu Hoperun and OBiO Technology 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 Jiangsu Hoperun with a short position of OBiO Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Hoperun and OBiO Technology.

Diversification Opportunities for Jiangsu Hoperun and OBiO Technology

0.89

Correlation Coefficient

Jiangsu Hoperun  OBiO Technology

Very poor diversification

The 3 months correlation between Jiangsu and OBiO is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Hoperun Software and OBiO Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBiO Technology Corp and Jiangsu Hoperun 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 Jiangsu Hoperun Software are associated (or correlated) with OBiO Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBiO Technology Corp has no effect on the direction of Jiangsu Hoperun i.e., Jiangsu Hoperun and OBiO Technology go up and down completely randomly.

Pair Corralation between Jiangsu Hoperun and OBiO Technology

Assuming the 90 days trading horizon Jiangsu Hoperun Software is expected to generate 1.49 times more return on investment than OBiO Technology. However, Jiangsu Hoperun is 1.49 times more volatile than OBiO Technology Corp. It trades about -0.01 of its potential returns per unit of risk. OBiO Technology Corp is currently generating about -0.02 per unit of risk. If you would invest  6,365  in Jiangsu Hoperun Software on November 19, 2024 and sell it today you would lose (353.00) from holding Jiangsu Hoperun Software or give up 5.55% of portfolio value over 90 days.

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

Jiangsu Hoperun Software  vs.  OBiO Technology Corp

Jiangsu Hoperun Software

Risk-Adjusted Performance

Very Weak

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

OBiO Technology Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Jiangsu Hoperun and OBiO Technology

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

The idea behind Jiangsu Hoperun Software and OBiO Technology Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.