Correlation Between Heren Health and Jinlong Machinery

Can any of the company-specific risk be diversified away by investing in both Heren Health and Jinlong Machinery 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 Heren Health and Jinlong Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heren Health Co and Jinlong Machinery Electronic, you can compare the effects of market volatilities on Heren Health and Jinlong Machinery 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 Heren Health with a short position of Jinlong Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heren Health and Jinlong Machinery.

Diversification Opportunities for Heren Health and Jinlong Machinery

0.43

Correlation Coefficient

Heren Health  Jinlong Machinery

Very weak diversification

The 3 months correlation between Heren and Jinlong is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Heren Health Co and Jinlong Machinery Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinlong Machinery and Heren Health 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 Heren Health Co are associated (or correlated) with Jinlong Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinlong Machinery has no effect on the direction of Heren Health i.e., Heren Health and Jinlong Machinery go up and down completely randomly.

Pair Corralation between Heren Health and Jinlong Machinery

Assuming the 90 days trading horizon Heren Health Co is expected to under-perform the Jinlong Machinery. In addition to that, Heren Health is 1.28 times more volatile than Jinlong Machinery Electronic. It trades about -0.02 of its total potential returns per unit of risk. Jinlong Machinery Electronic is currently generating about -0.01 per unit of volatility. If you would invest  491.00  in Jinlong Machinery Electronic on December 24, 2024 and sell it today you would lose (18.00) from holding Jinlong Machinery Electronic or give up 3.67% of portfolio value over 90 days.

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

Heren Health Co  vs.  Jinlong Machinery Electronic

Heren Health

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Heren Health and Jinlong Machinery

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

The idea behind Heren Health Co and Jinlong Machinery Electronic 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.