Correlation Between Shenzhen Mindray and Jointo Energy

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

By analyzing existing cross correlation between Shenzhen Mindray Bio Medical and Jointo Energy Investment, you can compare the effects of market volatilities on Shenzhen Mindray and Jointo Energy 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 Shenzhen Mindray with a short position of Jointo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Mindray and Jointo Energy.

Diversification Opportunities for Shenzhen Mindray and Jointo Energy

0.58

Correlation Coefficient

Shenzhen Mindray  Jointo Energy

Very weak diversification

The 3 months correlation between Shenzhen and Jointo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Mindray Bio Medical and Jointo Energy Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jointo Energy Investment and Shenzhen Mindray 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 Shenzhen Mindray Bio Medical are associated (or correlated) with Jointo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jointo Energy Investment has no effect on the direction of Shenzhen Mindray i.e., Shenzhen Mindray and Jointo Energy go up and down completely randomly.

Pair Corralation between Shenzhen Mindray and Jointo Energy

Assuming the 90 days trading horizon Shenzhen Mindray Bio Medical is expected to under-perform the Jointo Energy. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Mindray Bio Medical is 1.3 times less risky than Jointo Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Jointo Energy Investment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  613.00  in Jointo Energy Investment on December 27, 2024 and sell it today you would lose (28.00) from holding Jointo Energy Investment or give up 4.57% of portfolio value over 90 days.

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

Shenzhen Mindray Bio Medical  vs.  Jointo Energy Investment

Shenzhen Mindray Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Mindray Bio Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Jointo Energy Investment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shenzhen Mindray and Jointo Energy

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

The idea behind Shenzhen Mindray Bio Medical and Jointo Energy Investment 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.