Correlation Between Tjk Machinery and Guangdong Jingyi

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

By analyzing existing cross correlation between Tjk Machinery Tianjin and Guangdong Jingyi Metal, you can compare the effects of market volatilities on Tjk Machinery and Guangdong Jingyi 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 Tjk Machinery with a short position of Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tjk Machinery and Guangdong Jingyi.

Diversification Opportunities for Tjk Machinery and Guangdong Jingyi

0.79

Correlation Coefficient

Tjk Machinery  Guangdong Jingyi

Poor diversification

The 3 months correlation between Tjk and Guangdong is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tjk Machinery Tianjin and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal and Tjk Machinery 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 Tjk Machinery Tianjin are associated (or correlated) with Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of Tjk Machinery i.e., Tjk Machinery and Guangdong Jingyi go up and down completely randomly.

Pair Corralation between Tjk Machinery and Guangdong Jingyi

Assuming the 90 days trading horizon Tjk Machinery is expected to generate 2.51 times less return on investment than Guangdong Jingyi. In addition to that, Tjk Machinery is 1.38 times more volatile than Guangdong Jingyi Metal. It trades about 0.04 of its total potential returns per unit of risk. Guangdong Jingyi Metal is currently generating about 0.13 per unit of volatility. If you would invest  671.00  in Guangdong Jingyi Metal on December 25, 2024 and sell it today you would earn a total of  108.00  from holding Guangdong Jingyi Metal or generate 16.1% return on investment over 90 days.

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

Tjk Machinery Tianjin  vs.  Guangdong Jingyi Metal

Tjk Machinery Tianjin

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tjk Machinery Tianjin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tjk Machinery may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guangdong Jingyi Metal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tjk Machinery and Guangdong Jingyi

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

The idea behind Tjk Machinery Tianjin and Guangdong Jingyi Metal 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.