Correlation Between Yingde Greatchem and Jinhui Mining

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

By analyzing existing cross correlation between Yingde Greatchem Chemicals and Jinhui Mining Co, you can compare the effects of market volatilities on Yingde Greatchem and Jinhui Mining 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 Yingde Greatchem with a short position of Jinhui Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yingde Greatchem and Jinhui Mining.

Diversification Opportunities for Yingde Greatchem and Jinhui Mining

0.6

Correlation Coefficient

Yingde Greatchem  Jinhui Mining

Poor diversification

The 3 months correlation between Yingde and Jinhui is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Yingde Greatchem Chemicals and Jinhui Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhui Mining and Yingde Greatchem 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 Yingde Greatchem Chemicals are associated (or correlated) with Jinhui Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinhui Mining has no effect on the direction of Yingde Greatchem i.e., Yingde Greatchem and Jinhui Mining go up and down completely randomly.

Pair Corralation between Yingde Greatchem and Jinhui Mining

Assuming the 90 days trading horizon Yingde Greatchem is expected to generate 1.07 times less return on investment than Jinhui Mining. In addition to that, Yingde Greatchem is 1.0 times more volatile than Jinhui Mining Co. It trades about 0.05 of its total potential returns per unit of risk. Jinhui Mining Co is currently generating about 0.05 per unit of volatility. If you would invest  1,149  in Jinhui Mining Co on December 26, 2024 and sell it today you would earn a total of  45.00  from holding Jinhui Mining Co or generate 3.92% return on investment over 90 days.

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

Yingde Greatchem Chemicals  vs.  Jinhui Mining Co

Yingde Greatchem Che

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yingde Greatchem Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yingde Greatchem is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jinhui Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhui Mining Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jinhui Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yingde Greatchem and Jinhui Mining

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

The idea behind Yingde Greatchem Chemicals and Jinhui Mining 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.