Correlation Between Porton Fine and JA Solar

Can any of the company-specific risk be diversified away by investing in both Porton Fine and JA Solar 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 Porton Fine and JA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Porton Fine Chemicals and JA Solar Technology, you can compare the effects of market volatilities on Porton Fine and JA Solar 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 Porton Fine with a short position of JA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porton Fine and JA Solar.

Diversification Opportunities for Porton Fine and JA Solar

0.79

Correlation Coefficient

Porton Fine  JA Solar

Poor diversification

The 3 months correlation between Porton and 002459 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Porton Fine Chemicals and JA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JA Solar Technology and Porton Fine 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 Porton Fine Chemicals are associated (or correlated) with JA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JA Solar Technology has no effect on the direction of Porton Fine i.e., Porton Fine and JA Solar go up and down completely randomly.

Pair Corralation between Porton Fine and JA Solar

Assuming the 90 days trading horizon Porton Fine Chemicals is expected to under-perform the JA Solar. In addition to that, Porton Fine is 1.23 times more volatile than JA Solar Technology. It trades about -0.66 of its total potential returns per unit of risk. JA Solar Technology is currently generating about -0.73 per unit of volatility. If you would invest  1,596  in JA Solar Technology on October 8, 2024 and sell it today you would lose (290.00) from holding JA Solar Technology or give up 18.17% of portfolio value over 90 days.

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

Porton Fine Chemicals  vs.  JA Solar Technology

Porton Fine Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Porton Fine Chemicals 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.

JA Solar Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JA Solar Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Porton Fine and JA Solar

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

The idea behind Porton Fine Chemicals and JA Solar 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.