Correlation Between Jiangsu Jinling and Suzhou Industrial

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

By analyzing existing cross correlation between Jiangsu Jinling Sports and Suzhou Industrial Park, you can compare the effects of market volatilities on Jiangsu Jinling and Suzhou Industrial 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 Jinling with a short position of Suzhou Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Jinling and Suzhou Industrial.

Diversification Opportunities for Jiangsu Jinling and Suzhou Industrial

0.26

Correlation Coefficient

Jiangsu Jinling  Suzhou Industrial

Modest diversification

The 3 months correlation between Jiangsu and Suzhou is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Jinling Sports and Suzhou Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Industrial Park and Jiangsu Jinling 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 Jinling Sports are associated (or correlated) with Suzhou Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Industrial Park has no effect on the direction of Jiangsu Jinling i.e., Jiangsu Jinling and Suzhou Industrial go up and down completely randomly.

Pair Corralation between Jiangsu Jinling and Suzhou Industrial

Assuming the 90 days trading horizon Jiangsu Jinling Sports is expected to under-perform the Suzhou Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Jiangsu Jinling Sports is 1.33 times less risky than Suzhou Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Suzhou Industrial Park is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  916.00  in Suzhou Industrial Park on October 12, 2024 and sell it today you would earn a total of  137.00  from holding Suzhou Industrial Park or generate 14.96% return on investment over 90 days.

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

Jiangsu Jinling Sports  vs.  Suzhou Industrial Park

Jiangsu Jinling Sports

Risk-Adjusted Performance

0 of 100

Very Weak

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

Suzhou Industrial Park

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Industrial Park are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangsu Jinling and Suzhou Industrial

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

The idea behind Jiangsu Jinling Sports and Suzhou Industrial Park 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 Stocks Directory module to find actively traded stocks across global markets.