Correlation Between Guangdong Jinma and SICC

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

By analyzing existing cross correlation between Guangdong Jinma Entertainment and SICC Co, you can compare the effects of market volatilities on Guangdong Jinma and SICC 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 Jinma with a short position of SICC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jinma and SICC.

Diversification Opportunities for Guangdong Jinma and SICC

0.16

Correlation Coefficient

Guangdong Jinma  SICC

Average diversification

The 3 months correlation between Guangdong and SICC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jinma Entertainment and SICC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SICC and Guangdong Jinma 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 Jinma Entertainment are associated (or correlated) with SICC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SICC has no effect on the direction of Guangdong Jinma i.e., Guangdong Jinma and SICC go up and down completely randomly.

Pair Corralation between Guangdong Jinma and SICC

Assuming the 90 days trading horizon Guangdong Jinma Entertainment is expected to generate 1.0 times more return on investment than SICC. However, Guangdong Jinma is 1.0 times more volatile than SICC Co. It trades about 0.01 of its potential returns per unit of risk. SICC Co is currently generating about -0.02 per unit of risk. If you would invest  1,554  in Guangdong Jinma Entertainment on October 5, 2024 and sell it today you would lose (105.00) from holding Guangdong Jinma Entertainment or give up 6.76% of portfolio value over 90 days.

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

Guangdong Jinma Entertainment  vs.  SICC Co

Guangdong Jinma Ente

Risk-Adjusted Performance

0 of 100

Very Weak

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

SICC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SICC 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.

Pair Trading with Guangdong Jinma and SICC

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

The idea behind Guangdong Jinma Entertainment and SICC Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.