Correlation Between Goke Microelectronics and Jilin Chemical

Can any of the company-specific risk be diversified away by investing in both Goke Microelectronics and Jilin Chemical 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 Goke Microelectronics and Jilin Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goke Microelectronics Co and Jilin Chemical Fibre, you can compare the effects of market volatilities on Goke Microelectronics and Jilin Chemical 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 Goke Microelectronics with a short position of Jilin Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goke Microelectronics and Jilin Chemical.

Diversification Opportunities for Goke Microelectronics and Jilin Chemical

0.33

Correlation Coefficient

Goke Microelectronics  Jilin Chemical

Weak diversification

The 3 months correlation between Goke and Jilin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Goke Microelectronics Co and Jilin Chemical Fibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin Chemical Fibre and Goke Microelectronics 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 Goke Microelectronics Co are associated (or correlated) with Jilin Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin Chemical Fibre has no effect on the direction of Goke Microelectronics i.e., Goke Microelectronics and Jilin Chemical go up and down completely randomly.

Pair Corralation between Goke Microelectronics and Jilin Chemical

Assuming the 90 days trading horizon Goke Microelectronics Co is expected to under-perform the Jilin Chemical. In addition to that, Goke Microelectronics is 1.01 times more volatile than Jilin Chemical Fibre. It trades about -0.07 of its total potential returns per unit of risk. Jilin Chemical Fibre is currently generating about 0.01 per unit of volatility. If you would invest  354.00  in Jilin Chemical Fibre on October 5, 2024 and sell it today you would lose (4.00) from holding Jilin Chemical Fibre or give up 1.13% of portfolio value over 90 days.

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

Goke Microelectronics Co  vs.  Jilin Chemical Fibre

Goke Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goke Microelectronics Co 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.

Jilin Chemical Fibre

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Goke Microelectronics and Jilin Chemical

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

The idea behind Goke Microelectronics Co and Jilin Chemical Fibre 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.