Correlation Between Hainan Poly and Guangdong Jingyi

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

By analyzing existing cross correlation between Hainan Poly Pharm and Guangdong Jingyi Metal, you can compare the effects of market volatilities on Hainan Poly and Guangdong Jingyi 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 Hainan Poly with a short position of Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Poly and Guangdong Jingyi.

Diversification Opportunities for Hainan Poly and Guangdong Jingyi

-0.27

Correlation Coefficient

Hainan Poly  Guangdong Jingyi

Very good diversification

The 3 months correlation between Hainan and Guangdong is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Poly Pharm and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal and Hainan Poly 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 Hainan Poly Pharm are associated (or correlated) with Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of Hainan Poly i.e., Hainan Poly and Guangdong Jingyi go up and down completely randomly.

Pair Corralation between Hainan Poly and Guangdong Jingyi

Assuming the 90 days trading horizon Hainan Poly Pharm is expected to under-perform the Guangdong Jingyi. In addition to that, Hainan Poly is 4.11 times more volatile than Guangdong Jingyi Metal. It trades about -0.17 of its total potential returns per unit of risk. Guangdong Jingyi Metal is currently generating about 0.13 per unit of volatility. If you would invest  671.00  in Guangdong Jingyi Metal on December 25, 2024 and sell it today you would earn a total of  108.00  from holding Guangdong Jingyi Metal or generate 16.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.55%
Values	Daily Returns

Hainan Poly Pharm  vs.  Guangdong Jingyi Metal

Hainan Poly Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hainan Poly Pharm 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guangdong Jingyi Metal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hainan Poly and Guangdong Jingyi

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

The idea behind Hainan Poly Pharm and Guangdong Jingyi Metal 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.