Correlation Between Jahen Household and Jiangxi JDL

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

By analyzing existing cross correlation between Jahen Household Products and Jiangxi JDL Environmental, you can compare the effects of market volatilities on Jahen Household and Jiangxi JDL 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 Jahen Household with a short position of Jiangxi JDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jahen Household and Jiangxi JDL.

Diversification Opportunities for Jahen Household and Jiangxi JDL

0.93

Correlation Coefficient

Jahen Household  Jiangxi JDL

Almost no diversification

The 3 months correlation between Jahen and Jiangxi is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Jahen Household Products and Jiangxi JDL Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi JDL Environmental and Jahen Household 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 Jahen Household Products are associated (or correlated) with Jiangxi JDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi JDL Environmental has no effect on the direction of Jahen Household i.e., Jahen Household and Jiangxi JDL go up and down completely randomly.

Pair Corralation between Jahen Household and Jiangxi JDL

Assuming the 90 days trading horizon Jahen Household Products is expected to generate 1.63 times more return on investment than Jiangxi JDL. However, Jahen Household is 1.63 times more volatile than Jiangxi JDL Environmental. It trades about 0.25 of its potential returns per unit of risk. Jiangxi JDL Environmental is currently generating about 0.2 per unit of risk. If you would invest  1,135  in Jahen Household Products on September 13, 2024 and sell it today you would earn a total of  882.00  from holding Jahen Household Products or generate 77.71% return on investment over 90 days.

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

Jahen Household Products  vs.  Jiangxi JDL Environmental

Jahen Household Products

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jahen Household Products are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jahen Household sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangxi JDL Environmental

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi JDL Environmental are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi JDL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jahen Household and Jiangxi JDL

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

The idea behind Jahen Household Products and Jiangxi JDL Environmental 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 Commodity Directory module to find actively traded commodities issued by global exchanges.