Correlation Between Guangdong Xiongsu and Jonjee Hi

Can any of the company-specific risk be diversified away by investing in both Guangdong Xiongsu and Jonjee Hi 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 Guangdong Xiongsu and Jonjee Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Xiongsu Technology and Jonjee Hi tech Industrial, you can compare the effects of market volatilities on Guangdong Xiongsu and Jonjee Hi 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 Guangdong Xiongsu with a short position of Jonjee Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Xiongsu and Jonjee Hi.

Diversification Opportunities for Guangdong Xiongsu and Jonjee Hi

0.91

Correlation Coefficient

Guangdong Xiongsu  Jonjee Hi

Almost no diversification

The 3 months correlation between Guangdong and Jonjee is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Xiongsu Technology and Jonjee Hi tech Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jonjee Hi tech and Guangdong Xiongsu 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 Guangdong Xiongsu Technology are associated (or correlated) with Jonjee Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jonjee Hi tech has no effect on the direction of Guangdong Xiongsu i.e., Guangdong Xiongsu and Jonjee Hi go up and down completely randomly.

Pair Corralation between Guangdong Xiongsu and Jonjee Hi

Assuming the 90 days trading horizon Guangdong Xiongsu Technology is expected to generate 1.4 times more return on investment than Jonjee Hi. However, Guangdong Xiongsu is 1.4 times more volatile than Jonjee Hi tech Industrial. It trades about 0.02 of its potential returns per unit of risk. Jonjee Hi tech Industrial is currently generating about -0.03 per unit of risk. If you would invest  719.00  in Guangdong Xiongsu Technology on September 16, 2024 and sell it today you would earn a total of  48.00  from holding Guangdong Xiongsu Technology or generate 6.68% return on investment over 90 days.

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

Guangdong Xiongsu Technology  vs.  Jonjee Hi tech Industrial

Guangdong Xiongsu

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Xiongsu Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Xiongsu sustained solid returns over the last few months and may actually be approaching a breakup point.

Jonjee Hi tech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jonjee Hi tech Industrial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jonjee Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangdong Xiongsu and Jonjee Hi

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

The idea behind Guangdong Xiongsu Technology and Jonjee Hi tech Industrial 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.