Correlation Between Shenzhen Bioeasy and Jinhui Mining

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

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

Diversification Opportunities for Shenzhen Bioeasy and Jinhui Mining

0.67

Correlation Coefficient

Shenzhen Bioeasy  Jinhui Mining

Poor diversification

The 3 months correlation between Shenzhen and Jinhui is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bioeasy Biotechnology and Jinhui Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhui Mining and Shenzhen Bioeasy 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 Bioeasy Biotechnology 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 Shenzhen Bioeasy i.e., Shenzhen Bioeasy and Jinhui Mining go up and down completely randomly.

Pair Corralation between Shenzhen Bioeasy and Jinhui Mining

Assuming the 90 days trading horizon Shenzhen Bioeasy Biotechnology is expected to under-perform the Jinhui Mining. In addition to that, Shenzhen Bioeasy is 1.68 times more volatile than Jinhui Mining Co. It trades about -0.02 of its total potential returns per unit of risk. Jinhui Mining Co is currently generating about 0.01 per unit of volatility. If you would invest  1,197  in Jinhui Mining Co on September 20, 2024 and sell it today you would lose (43.00) from holding Jinhui Mining Co or give up 3.59% of portfolio value over 90 days.

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

Shenzhen Bioeasy Biotechnology  vs.  Jinhui Mining Co

Shenzhen Bioeasy Bio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Bioeasy Biotechnology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Bioeasy sustained solid returns over the last few months and may actually be approaching a breakup point.

Jinhui Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhui Mining Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinhui Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shenzhen Bioeasy and Jinhui Mining

The main advantage of trading using opposite Shenzhen Bioeasy and Jinhui Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Bioeasy 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 Shenzhen Bioeasy Biotechnology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.