Correlation Between Yoantion Industrial and Xiamen Jihong

Can any of the company-specific risk be diversified away by investing in both Yoantion Industrial and Xiamen Jihong 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 Yoantion Industrial and Xiamen Jihong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yoantion Industrial IncLtd and Xiamen Jihong Package, you can compare the effects of market volatilities on Yoantion Industrial and Xiamen Jihong 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 Yoantion Industrial with a short position of Xiamen Jihong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yoantion Industrial and Xiamen Jihong.

Diversification Opportunities for Yoantion Industrial and Xiamen Jihong

0.71

Correlation Coefficient

Yoantion Industrial  Xiamen Jihong

Poor diversification

The 3 months correlation between Yoantion and Xiamen is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Yoantion Industrial IncLtd and Xiamen Jihong Package in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Jihong Package and Yoantion Industrial 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 Yoantion Industrial IncLtd are associated (or correlated) with Xiamen Jihong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Jihong Package has no effect on the direction of Yoantion Industrial i.e., Yoantion Industrial and Xiamen Jihong go up and down completely randomly.

Pair Corralation between Yoantion Industrial and Xiamen Jihong

Assuming the 90 days trading horizon Yoantion Industrial is expected to generate 1.36 times less return on investment than Xiamen Jihong. In addition to that, Yoantion Industrial is 1.09 times more volatile than Xiamen Jihong Package. It trades about 0.11 of its total potential returns per unit of risk. Xiamen Jihong Package is currently generating about 0.16 per unit of volatility. If you would invest  1,083  in Xiamen Jihong Package on September 20, 2024 and sell it today you would earn a total of  381.00  from holding Xiamen Jihong Package or generate 35.18% return on investment over 90 days.

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

Yoantion Industrial IncLtd  vs.  Xiamen Jihong Package

Yoantion Industrial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yoantion Industrial IncLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yoantion Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Xiamen Jihong Package

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Yoantion Industrial and Xiamen Jihong

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

The idea behind Yoantion Industrial IncLtd and Xiamen Jihong Package 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.