Correlation Between Jiangxi Naipu and Zhangzhou Pientzehuang

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

By analyzing existing cross correlation between Jiangxi Naipu Mining and Zhangzhou Pientzehuang Pharmaceutical, you can compare the effects of market volatilities on Jiangxi Naipu and Zhangzhou Pientzehuang 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 Jiangxi Naipu with a short position of Zhangzhou Pientzehuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Naipu and Zhangzhou Pientzehuang.

Diversification Opportunities for Jiangxi Naipu and Zhangzhou Pientzehuang

0.66

Correlation Coefficient

Jiangxi Naipu  Zhangzhou Pientzehuang

Poor diversification

The 3 months correlation between Jiangxi and Zhangzhou is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Naipu Mining and Zhangzhou Pientzehuang Pharmac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangzhou Pientzehuang and Jiangxi Naipu 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 Jiangxi Naipu Mining are associated (or correlated) with Zhangzhou Pientzehuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangzhou Pientzehuang has no effect on the direction of Jiangxi Naipu i.e., Jiangxi Naipu and Zhangzhou Pientzehuang go up and down completely randomly.

Pair Corralation between Jiangxi Naipu and Zhangzhou Pientzehuang

Assuming the 90 days trading horizon Jiangxi Naipu Mining is expected to generate 1.29 times more return on investment than Zhangzhou Pientzehuang. However, Jiangxi Naipu is 1.29 times more volatile than Zhangzhou Pientzehuang Pharmaceutical. It trades about 0.04 of its potential returns per unit of risk. Zhangzhou Pientzehuang Pharmaceutical is currently generating about -0.36 per unit of risk. If you would invest  2,920  in Jiangxi Naipu Mining on September 22, 2024 and sell it today you would earn a total of  32.00  from holding Jiangxi Naipu Mining or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Jiangxi Naipu Mining  vs.  Zhangzhou Pientzehuang Pharmac

Jiangxi Naipu Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Naipu Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Naipu sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhangzhou Pientzehuang

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhangzhou Pientzehuang Pharmaceutical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhangzhou Pientzehuang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangxi Naipu and Zhangzhou Pientzehuang

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

The idea behind Jiangxi Naipu Mining and Zhangzhou Pientzehuang Pharmaceutical 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.